India’s Ban on Bangladeshi Garment Transhipment via Land Routes: A ₹1,000 - ₹2,000  Crore Opportunity for Its Textile Industry....

India recently restricted garment imports from Bangladesh coming over land, a move anticipated to generate a substantial revenue boost for India's textile industry. Photo: Textile Insights.

While this could temporarily disrupt supply chains for major clothing brands and lead to a 2-3% price increase for items like T-shirts and denims this winter, it's a direct response to a surge in duty-free textile imports from Bangladesh under India's existing trade policy. 

The Directorate General of Foreign Trade (DGFT) issued a notification prohibiting land imports, though sea shipments via Kolkata and Nhava Sheva are still permitted.

India’s trade measures, including the April 8, 2025, termination of the land-based transhipment facility for Bangladeshi exports and the May 17, 2025, restriction on garment imports via land ports, are poised to reshape the regional textile landscape. 

By disrupting Bangladesh’s $45 billion ready-made garment (RMG) sector, these policies create a strategic opening for India’s $14.5 billion garment industry to capture global and domestic market share, potentially generating around ₹1,000 crore -- ₹2,000 crore in additional revenue,

This article explores the implications of these restrictions, their impact on Bangladesh, and the opportunities for Indian textile firms.

The Policy Shift: Land Transhipment Ban and Import Restrictions:

Since June 2020, India allowed Bangladeshi exporters to route goods, primarily garments, through its land customs stations (e.g., Petrapole, Changrabandha) to Indian ports and airports for shipment to markets like the Middle East and Europe. This facility reduced transit times and costs, with 34,900 tonnes of apparel worth $462.34 million transhipped between January 2024 and March 2025. 

However, on April 8, 2025, India revoked this land-based transhipment facility for exports to third countries (excluding Nepal and Bhutan), citing congestion at border posts and pressure from the Apparel Export Promotion Council (AEPC), which reported inflated freight costs for Indian exporters.

On May 17, 2025, India further restricted Bangladeshi garment imports through land ports, limiting entry to Kolkata and Nhava Sheva sea ports. This affects 93% of Bangladesh’s $700 million annual garment exports to India, previously entering via land routes. 

These measures align with India’s broader trade recalibration, partly in response to Bangladesh’s March 2025 suspension of Indian yarn and rice imports and closure of three land ports.

Disclaimer: While the transhipment ban clearly applies to land routes, some sources suggest Indian airports (e.g., Delhi) may still handle Bangladeshi cargo with increased scrutiny. Readers are encouraged to verify details via official DGFT notifications.

Impact on Bangladesh’s Garment Industry:

Bangladesh, the world’s second-largest garment exporter, relies on its RMG sector for 85% of its $55 billion export revenue. The land transhipment ban forces exporters to depend on domestic infrastructure, primarily the overburdened Chattogram port and Dhaka airport. Smaller facilities like Sylhet and Chattogram airports are scaling up, with Sylhet’s first cargo flight planned for April 27, 2025, but lack capacity for large-scale exports. 

Rerouting via sea ports like Colombo or Dubai extends transit times from one week (via India) to up to eight weeks, disrupting just-in-time delivery for brands like H&M and Zara.

The May 2025 import restrictions further strain Bangladesh’s $700 million garment trade with India, raising logistics costs by 10-15% as shipments shift to sea ports. Domestic challenges, including political instability and the closure of 170 factories since August 2024, exacerbate the sector’s vulnerabilities, potentially pushing global buyers to alternative hubs.

Opportunities for Indian Textile Firms:

India’s garment industry stands to gain significantly from Bangladesh’s challenges. Key opportunities include:

Global Order Shift: Industry estimates suggest a 10-11% redirection of Bangladesh’s $3.5-3.8 billion monthly garment exports could yield $300-400 million monthly for India, exceeding ₹1,000 crore annually. Firms like Arvind Limited and Shahi Exports report a 15-20% order surge since mid-2024.

Logistics Relief: The land transhipment ban reduces congestion at border posts, where 20-30 Bangladeshi trucks arrived daily, lowering freight costs and transit times for Indian exporters, particularly to the U.S. and Europe (60% of India’s textile exports).

Domestic Market Growth: The import ban protects Indian MSMEs from low-cost Bangladeshi garments, enabling them to capture domestic share, especially in the Northeast.

Competitive Edge: India’s diverse fabrics, quality production, and sustainability focus align with the “China+1” strategy, attracting buyers diversifying from Bangladesh and China.

Geopolitical Context:

The trade measures reflect strained India-Bangladesh relations following the August 2024 ousting of Sheikh Hasina. 

Bangladesh’s interim government’s decision to suspend Indian imports and close land ports, alongside comments promoting Chinese investment, prompted India’s reciprocal actions. These policies balance economic priorities with strategic interests, particularly in the sensitive northeastern region.

Challenges for India:

To sustain this opportunity, India must address structural issues, including high logistics costs, outdated labor laws, and longer lead times (63 days vs. Bangladesh’s 50). Investments in large-scale manufacturing, port efficiency, and sustainability compliance are critical to compete globally.

Conclusion:

India’s land transhipment ban and import restrictions position its textile industry to gain around ₹1,000 crore to ₹2,000 crore by capturing orders from Bangladesh’s disrupted RMG sector.

While it takes only two-three days for apparel produced in Bangladesh to move through land borders, now the transit time is going to be longer, depending on how long it takes for ships to sail to Kolkata and Nhava Sheva (Mumbai), the two designated ports, and clear customs before taking the land route to reach Indian warehouses.

Incidentally, even though Bangladesh accounts for 35% of India's garment imports, these imports only represent a tiny fraction (1-2%) of India's total apparel consumption. This policy change is likely to affect the sourcing strategies of both small and large apparel companies, potentially causing temporary supply chain issues and a slight rise in retail prices.

Despite potential immediate challenges like supply bottlenecks, those within the industry see this restriction as a key moment to realign India's textile trade and foster a stronger, more competitive domestic apparel sector.

Finally, by leveraging its manufacturing strengths and addressing internal challenges, India can emerge as a leading global apparel hub. Readers are encouraged to monitor official trade updates for ongoing developments.