The president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is calling on India to reinstate transshipment services for goods leaving the south Asian country.
In an interview with Indian news outlet Asian News International (ANI), BGMEA head Faruque Hassan said that the cancellation of the transshipment services would increase freight costs and lead times for exports out of Bangladesh.
Last Tuesday, India revoked Bangladesh’s access to a transshipment service that had enabled the country to export goods via its land borders using India’s customs stations. Goods flowing through these stations often are sent to Indian ports and airports, where they are shipped out via air or ocean to third-party countries.
“This is going to impact shipments destined for the U.S., Germany, the U.K. and other areas in the Western world where we are shipping the goods,” Hassan said. “We have fewer facilities of shipping goods directly, so therefore, we have to ship via different countries.”
According to Hassan, Bangladesh doesn’t ship a high quantity of goods through India. But he feels this takes away optionality Bangladeshi apparel exporters may have.
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“For global businesses, you must have more options,” Hassan said. “It will reduce our competitiveness.”
Hassan said just 5 percent of exports leave via air, but customers and freight forwarders will sometimes opt to fly those goods out of India instead because it consumes less time than flying them out of Bangladesh.
“We don’t have many cargo flights from Bangladesh,” Hassan noted, indicating that the Bangladeshi government should immediately incentivize more airlines to the country’s three international airports in Dhaka, Chattogram and Sylhet.
Dhaka is currently expecting a third terminal to be completed by mid-2025. That terminal buildout will more than double the airport’s wider cargo-handling capacity from 200,000 metric tons to 500,000 metric tons annually.
“If we open this third terminal and increase facilities in Chattogram and Sylhet, I’m sure we will overcome this problem,” said Hassan. Dhaka is the only major air export zone out of Bangladesh, with the Chattogram seaport carrying the load for oceangoing exports.
Hassan said in the Friday interview that he plans on formally requesting the Indian government to withdraw the transshipment decision.
India made the decision as its own exporters urged the government to end the service, noting that it had resulted in significant congestion at the ports and airports. The country’s foreign affairs ministry Randhir Jaiswal said at the time that the backlogs led to more logistical delays and higher costs.
Hassan’s plea comes as he says the dominant apparel and garment manufacturing industry is already enduring a challenging year, largely in part to the tariffs imposed by U.S. President Donald Trump. Trump initially slapped a 37-percent tariff on all imports from Bangladesh, but ended up suspending all country-specific duties for 90 days to make room for negotiations with the U.S.
But neither Bangladesh nor any other country appears to be getting out of the tariffs unscathed without cutting some form of a deal, For the duration of the delay, goods out of Bangladesh will still have a 10-percent tariff attached, which isn’t a small number for a low-margin, high-volume export like apparel.
“The landed price of apparel and garments in the U.S. is going to increase, which is going to increase inflation as well,” Hassan told ANI. “Bangladesh manufacturers are already under pressure for this global scenario.”
The ready-made garment (RMG) industry is Bangladesh’s backbone in many respects. According to the Bangladesh Export Promotion Bureau, apparel represents 81 percent of the country’s total exports.
Hassan highlighted the relationship between Bangladesh’s chief interim government adviser Muhammad Yunus and Indian Prime Minister Narendra Modi as an important building block for the countries going forward, especially as they exchange dialogue regarding trade.
“We import a huge quantity of our fabric, dyes, chemicals, machinery and yarn, so we are a big importer from India,” said Hassan. “India should acknowledge that we have a good relationship with them. We can work together. Our diplomatic side should work with India and make some resolution to this challenge.”
India first opened the transshipment service for Bangladesh in June 2020, giving the country another outlet to export goods when the Covid-19 pandemic ravaged the country’s RMG industry. The service enabled Bangladeshi apparel manufacturers to develop smoother trade flows when exporting goods to countries like Bhutan, Nepal and Myanmar.