Bangladesh suspends import of Indian yarn: Trade relations take another hit

India-Bangladesh relations have been spiralling down since the Muhammad Yuus-led interim regime held the reins in Bangladesh after the fall of the Sheikh Hasina government following a violent uprising in August last year. After India announced the termination of its trans-shipment facility for Bangladesh on 9th April, Bangladesh on Sunday (13th April) suspended the import of yarn from India through land ports.

The land ports of Benapole, Bhomra, Sonamasjid, Banglabandha, and Burimari were the main entry points of Indian yarn into Bangladesh.

The Bangladesh interim government has cited losses to local textile millers due to imported raw materials for the garment industry as the reason behind the move. The government said that the local yarn manufacturers are not able to compete with imported yarn, which is cheaper. In February this year, the Bangladesh Textile Mills Association (BTMA) requested the interim government to cease yarn imports from India via land ports. The BTMA claimed local producers were facing significant financial losses due to cheaper rates of Indian yarn. This led to the interim government temporarily suspending imports via land ports in March this year.

As per reports, the interim government of Bangladesh closed three land ports and suspended one land port with India, citing a lack of necessary infrastructure. The decision made by the National Board of Revenue (NBR) of Bangladesh to protect the local textile and spinning sector did not sit right with Bangladeshi garment and knitwear exporters. The move is reportedly intended to increase imports from Pakistan. However, importing raw material from Pakistan is likely to increase the import time and prices multiple times as compared to the time taken in importing yarn from India. This will eventually affect the local garment exporters’ ability to compete in a global market.

India terminated the trans-shipment facility for Bangladesh

Earlier this month, India terminated the trans-shipment facility for Bangladesh, which allowed the latter to export its products to other countries through Indian seaports and airports. The facility, granted in 2020, allowed Bangladeshi exporters to ship their cargo to India by road or rail, from where they were further shipped to other countries. Under this facility, Bangladesh sent container trucks from the Petrapole Land Port located on the India-Bangladesh border, the largest land port in South Asia, to Kolkata port, Kolkata Airport’s air cargo complex, and Nhavasheva Port in Maharashtra. Similarly, Bangladeshi exporters could ship their products from Petrapole Land Port, Gede Land Port or Ranaghat Land Port using freight trains to Nhavasheva Port, also known as Jawaharlal Nehru Port. From the ports and airports in India, the cargo was then shipped to its final destination countries. Bangladesh’s textile sector benefited majorly from the facility.

India’s decision to terminate the trans-shipment facility came after Bangladeshi Chief Advisor Md Yunus made controversial remarks on North East India. During his four-day visit to China last week, Yunus pitched for the extension of the Chinese economy, saying that as Northeast India is landlocked, Dhaka is the “only guardian of the ocean for all this region”.

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