India Ends Key Transshipment Route for Bangladesh Exports

11th April, 2025

UPSC GS-2: India and its neighbourhood relations

Context:
The editorial states that the trans-shipment service, which enabled Bangladeshi export cargo to use Indian land customs stations on its way to ports and airports, has been terminated. "This will help in the rationalisation of freight rates, resulting in less transportation cost to the Indian exporters, besides decongesting the airports, leading to a shorter transit time to ship the goods," said Mithileshwar Thakur, AEPC secretary general.This has brought new dimensions to India-Bangladesh relations.

Evolution of India-Bangladesh Relation

Cultural, linguistic, and historical links define the special bond between India and Bangladesh.

  • Because of their common history and cultural roots, as well as the immense suffering caused by the 1947 Partition of India and the subsequent massive separation of families, India and Bangladesh are inseparable.
  • Since it was the first nation to acknowledge Bangladesh as an independent state, India had a significant impact on the 1971 Liberation War and the subsequent rise of an independent Bangladesh. India celebrates "Vijay Diwas" on December 16, the day Bangladesh gained its independence.
  • The special bonds between India and Bangladesh are formed through mutual sacrifices.
  • Plus, India's prime minister just used the term "Sonali Adhyay" (golden period) to describe the current status of the bilateral relationship. 

Importance of Relations Between India and Bangladesh

For the Two Nations

      • Bangladesh ranks as India's top South Asian trading partner, whereas India ranks as Bangladesh's number two Asian trade partner.
  • In 2023–24, the value of bilateral commerce is $12.9 billion.
      • Border Control and Security: The two nations work hand in hand on many fronts, including anti-corruption efforts, police cooperation, and the prevention of illegal drug and counterfeit money trade and human trafficking.
      • Conflict Resolution Through Cooperation: Typical military drills are SAMPRITI and MILAN.
      • Border security along 4,096 kilometres of the international border is a priority for both nations, and they work together to ensure its integrity through measures such as joint inspections of boundary pillars and the construction of the appropriate fence.
  • Peaceful resolution of boundary conflicts can be seen in agreements like the Land Boundary Agreement (2015) and the Maritime Boundary Delimitation.
      • As far as marine security and the growth of the ocean economy are concerned, the two nations' goals for the Indo-Pacific region are converging, and they intend to work together on sub-regional cooperation.
  • Participation in various international forums, such as BIMSTEC, SAARC, BBIN (Bangladesh, Bhutan, India, Nepal), and IORA, are just a few examples.
  • Improvements in Connectivity: The Protocol on Inland Waterways Trade and Transit (PIWTT) and the Agreement for using the Ports of Chittagong and Mongla have been implemented.
  • Cultural and People-to-People Relations: Dhaka's Indian Cultural Centre and the Indira Gandhi Cultural Centre greatly commemorate shared cultural heritage.

Significance for India

  • Connectivity inside the country: Streamlined travel to the states in India's northeast. A cross-border train link between Akhaura and Agartala is one particular example.
  • Regional integration: Our 'Neighbourhood First' Policy, Act East Policy, Vision SAGAR, and Indo-Pacific Vision intersect in Bangladesh.
  • Support India's goal of becoming the dominant power in the area by working to mitigate the influence of China.

Significance for Bangladesh

  • Collaborative development: India has granted Lines of credit (LOC) totalling around $8 billion to Bangladesh over the past eight years.
  • India instructs law enforcement and civil servants in Bangladesh regarding human resource development.
  • Relief for human suffering and natural disasters (HADR): COVID-19 vaccinations, also known as Vaccine Maitri

Existing challenges in India-Bangladesh relations

Although there are a few obstacles, the relationship between India and Bangladesh has been mainly friendly. Here are a few current problems between India and Bangladesh:

Foreign policy difficulties

  • Problems with the shared border have persisted for a long time, especially in the Assam and Tripura regions.
  • The upheaval in Bangladesh has prompted a flood of people crossing the border into neighbouring nations, further straining already tense relations.
  • As a result of the massive migration, the people living in the Indian states that border Bangladesh have faced immense social, economic, and political difficulties.

Economic Issues

  • Prolonged customs processes and bureaucratic red tape are examples of non-tariff obstacles that have reduced trade between the two countries.
  • Disagreement over the distribution of river water is a major source of tension. In all, 54 rivers flow over international borders.

Problems with connectivity and border disputes

The border between India and Bangladesh has always been contentious. India and Bangladesh are separated by a land border of 4,096 km and a maritime border of 180 km. There is still no resolution to the border dispute since the 6.5-kilometre Comilla-Tripura land border has not been delineated.

  • Inadequate connectivity and infrastructure lead to disruptions in the growth of economic relations between the two.
  • Threats to national security: Terrorism: India has demanded more international collaboration in the fight against terrorism and accused terrorist groups based in Bangladesh of attacking Indian soil.
  • An insurgency has broken out in Bangladesh, with reports indicating that three different groups are operating there: the National Democratic Front of Bodoland, the National Liberation Front of Tripura, and the United Liberation Front of Assam (ULFA).

National Democratic Front of Bodoland: The National Democratic Front of Boroland (NDFB) was a militant separatist organisation that aimed to secure an independent Boroland for the Bodo populace. The Government of India classifies it as a terrorist outfit.
National Liberation Front of Tripura: The National Liberation Front of Tripura (NLFT) was a prohibited Christian Tripuri nationalist militant movement in Tripura, India. In 2001, it was estimated to have 1,500 members.
United Liberation Front of Assam: The United Liberation Front of Assam (ULFA) is a militant separatist movement active in the northeastern Indian state of Assam.

  • There is also speculation that the ULFA uses the proceeds from its many profitable businesses in Bangladesh to finance its insurgency activities in India.
  • China's growing investment in Bangladesh is essential, especially in the energy, telecommunications, and infrastructure sectors. Investment at the port of Chittagong and the Belt and Road Initiative are two examples.

Strategic Measures to China’s Expansionist Strategy

  • China's expansionist ambition presents a considerable risk to regional stability and global governance. Although its ascent is indisputable, unrestrained ambitions threaten to undermine the international order. 
  • The global response should prioritise fostering collaboration, upholding international regulations, and establishing coalitions to mitigate Beijing's growing influence.
  •  India must adopt a vigilant and proactive strategy—fortifying alliances, engaging in strategic partnerships, and fostering self-reliance—to effectively address the difficulties presented by China's assertive policies.

Power issues:

  • The dispute about dividing the water from shared rivers, such as the Ganges and the Brahmaputra, is known as water-sharing.
  • As part of an agreement reached in 2011, India was granted 42.5% of the river's Water in Bangladesh 37.5%, and the other 20% was allowed to flow freely. The split was done to keep the river's water flow minimal. So far, this agreement has remained unimplemented owing to significant disagreements.
  • The Farakka barrage conflict: Bangladesh has long opposed the project, which involves diverting water from the Ganges to the Hooghly River. 

Recent Developments in India-Bangladesh Relationship

  • After a student-led mass revolt in July and August 2024 toppled the Awami League administration, the bilateral relationship between India and Bangladesh entered a critical phase.
  • The rise of an interim government has brought about changes in diplomatic relations. Both countries must remember their common ground, their shared history, and the importance of working together in the future.
  • The Maitree Super Thermal Power Plant produces power fed into the Bangladeshi system, while the India-Bangladesh Friendship Pipeline carries high-speed diesel to Bangladesh.
  • As part of their partnership in digital public infrastructure, the National Payments Corporation of India (NPCI) and Bangladesh Bank signed a memorandum of understanding (MoU) to cooperate in digital payment systems to ease UPI transactions between the two countries.

Going Forward

Diplomatic Reset and Mutual Trust

  • The December 2024 visit of India's Foreign Secretary to Dhaka was a positive development.
  • The continuation of bilateral cooperation depends on New Delhi's proactive engagement with the interim government of Bangladesh.
  • To resolve misconceptions and alleviate tensions, a diplomatic framework should be established.

Enhancing Media Cooperation

  • To combat misinformation, the interim government of Bangladesh has invited Indian media to cover the situation.
  • The two nations could benefit from a joint media monitoring and fact-checking system.
  • A better understanding of one another can be achieved through enhancing academic partnerships and cultural exchanges.

Border Management and Defence

  • Border management systems between India and Bangladesh should be strengthened to ensure the humane treatment of border people and prevent illicit activity.
  • If we want to keep the peace in the region, we must work together to combat terrorism.

Economic and Trade Partnerships

  • India has military technology and training programs that Bangladesh can use.
  • Lowering commercial obstacles on both sides and looking into a Free Commercial Agreement (FTA) between India and Bangladesh would be beneficial.
  • The development of special economic zones (SEZs) within India for the benefit of Bangladeshi industry has the potential to integrate the two economies further.
  • Global forums such as the UN, WTO, and G20 allow India and Bangladesh to collaborate more efficiently to promote shared objectives.

Conclusion

Bangladesh and India must use diplomacy and pragmatism to overcome complicated obstacles at this crossroads in their relationship.

Practice

Q.Briefly discuss key challenges in India-Bangladesh ties. What critical measures can be taken to resolve them? 

FAQs

1. Which country is India's biggest trade partner in South Asia? 

The largest trading companion of the area is Bangladesh. The development of both nations will benefit from the widening connections and commerce infrastructure at their borders.

2. Which main economic concerns will influence India-Bangladesh relations by 2025?

A primary concern is India's closing of the transhipment facility for Bangladeshi goods and the restriction of medical visas. These actions have affected trade as well as personal contacts.