Dhaka’s Misstep, Delhi’s Counter: Why Yunus’ Words Cost Bangladesh Millions
For years, India and Bangladesh have shared a complex but vital trading relationship shaped by geography, history, and necessity. Trucks roll daily across the Benapole–Petrapole border, carrying garments, food products, and manufactured goods, symbolizing a lifeline for Bangladesh’s export economy. But in late August, that flow suddenly came to a standstill. Dozens of trucks laden with garments worth crores were stranded in no man’s land after India abruptly imposed restrictions on Bangladeshi imports. The disruption was not random. It came as a calculated counter to Chief Adviser Muhammad Yunus’ controversial remarks about India’s Seven Sister states. In one stroke, rhetoric turned into economic pain.
Yunus, riding on his interim government’s newfound assertiveness, made comments suggesting Bangladesh’s pivotal role in shaping connectivity and strategic influence over India’s Northeast. For New Delhi, already sensitive about the Seven Sisters because of their separatist history and geostrategic vulnerability, the remarks were nothing short of a provocation. India read it as Dhaka testing its leverage, and the Modi government wasted no time in reminding Bangladesh of the asymmetry that defines their economic relationship.
Within weeks of Yunus’ comments, India withdrew the transshipment facility that had allowed Bangladeshi goods to transit through Indian land customs to ports and airports. More damaging was the decision to restrict imports worth USD 770 million—about 42 percent of Bangladesh’s total bilateral imports into India. This included a near-total block on ready-made garments valued at USD 618 million annually. The fallout was immediate: 36 trucks carrying garments worth Rs 5 crore were stuck in no man’s land, exporters were left scrambling, and order schedules began to collapse.
The numbers expose the scale of the crisis. Bangladesh’s ready-made garment industry, the backbone of its economy, generates around USD 50 billion in exports annually, accounting for over 80 percent of its export earnings. The sector employs nearly 5 million workers, with women making up 55 percent of the workforce. India’s restrictions cut into one of its most lucrative export markets. Even a one percent contraction in this sector can push thousands out of jobs, lower household incomes, and strain social safety nets.
The costs are not limited to garments. Processed foods, plastic products, and small manufacturing units that relied on cross-border trade have also been disrupted. Exporters must now reroute shipments via seaports like Kolkata and Nhava Sheva, dramatically raising shipping distances and costs. What once took 80 kilometers to cover in the Northeast now requires nearly 2,000 kilometers of rerouting. For an industry that survives on razor-thin margins, this is nothing short of an existential threat.
Adding to the blow, Bangladesh’s interim government itself ordered the closure of three land ports—Chilahati, Daulatganj, Tegamukh—and suspended operations at Balla, terming them unprofitable and inactive. While this may have been a cost-cutting measure, the timing could not have been worse. Closing these access points while India simultaneously restricted imports reinforced the image of a shrinking trade corridor and weakened Bangladesh’s long-term dream of being a regional trade hub.
At the macroeconomic level, the implications are equally worrying. With a GDP of USD 467 billion and exports valued at USD 60.5 billion in 2024, losing USD 770 million in restricted trade represents more than one percent of annual export earnings. That dent translates into tighter foreign exchange inflows, increased stress on the current account deficit, and possible depletion of reserves. In a country already battling inflationary pressures, such shocks ripple into currency volatility and higher import bills.
The political miscalculation here is stark. Yunus’ rhetoric underestimated India’s leverage. Bangladesh relies on Indian land and port access for regional connectivity to Nepal, Bhutan, and even to India’s own northeastern states. India, on the other hand, can absorb the loss of Bangladeshi imports by boosting domestic production—Indian textiles alone stand to gain Rs 1,000 crore from the shift. What Yunus hoped would be a statement of regional assertiveness has instead backfired into an expensive lesson in realpolitik.
The broader strategic fallout is no less serious. India’s counterpunch coincides with Bangladesh’s increasing tilt toward China, adding a sharper edge to New Delhi’s message. It was a signal that access to Indian markets and infrastructure is not a right but a privilege, contingent on political goodwill and respect for India’s sensitivities.
The irony is hard to miss. A few words, perhaps meant to project strength, have ended up weakening Bangladesh’s economic foundations and straining bilateral ties. New Delhi’s measures have cost Dhaka millions, jeopardized jobs, and exposed the fragility of its economic model. The lesson for Bangladesh is sobering: in matters of diplomacy, economic interdependence with India is not leverage, but a vulnerability. And in testing that boundary over the Seven Sisters, Muhammad Yunus handed Narendra Modi the perfect excuse to remind Dhaka exactly who holds the keys to the border.
