Bangladesh Imports From India Rise to $10.96 Billion, Exports Remain Unchanged

Refayet Ullah Mirdha, Dhaka — Bangladesh's imports from India continue to rise despite restrictions imposed by both countries on the movement of some goods, while exports to the neighbouring country remained almost unchanged — a trade pattern that has widened the bilateral trade gap and raised questions about the effectiveness of recent trade restrictions.

The country imported goods worth $10.96 billion from India in fiscal year 2025-26, up from $9.62 billion a year earlier, according to National Board of Revenue (NBR) data. In contrast, exports to India stood at $1.75 billion in FY26, compared with $1.76 billion in the previous fiscal year — essentially flat year-on-year despite the broader trade tensions.

📊 FY26 Bangladesh-India Trade Performance

• 💰 Bangladesh imports from India (FY26): $10.96 billion (up from $9.62 billion YoY)
• 💰 Bangladesh exports to India (FY26): $1.75 billion (vs $1.76 billion YoY)
• 📊 Import growth YoY: ~14 percent
• 📊 Export growth YoY: approximately zero
• 📊 Trade gap: ~$9.21 billion (imports 6.27x exports)
• 🏛 India's position: Bangladesh's second-largest trading partner (after China)
• 🏛 South Asia position: India is Bangladesh's largest trading partner in region

🏛 Trade Restrictions Context

The figures show that trade between the two neighbours has continued despite restrictions introduced over the past two years, particularly on the movement of goods through land ports. The restrictions followed the political changeover in Bangladesh in 2024, with both countries implementing measures that have reshaped bilateral trade flows:

• 📅 March 2025: Bangladesh commerce ministry asked NBR to restrict yarn imports through land ports to protect local textile and spinning sector
• 📅 Early April 2025: India suspended transhipment facility used by Bangladesh to send garments to third countries through Indian airports
• 📅 April 2025 onwards: NBR restricted yarn imports from India through land ports — yarn imports now allowed only through Chattogram port
• 📅 Later in 2025: India imposed restrictions on import of garments, agro-processed food, jute goods, furniture and some other Bangladeshi goods through land ports

Despite the restrictions, imports of Indian goods continued to rise — suggesting that the underlying demand drivers (competitive pricing, buyer specifications, supply chain integration) have outweighed the policy restrictions.

🧵 Yarn Imports: A Case Study

Showkat Aziz Russell, President of the Bangladesh Textile Mills Association (BTMA), said yarn imports from India doubled to around Tk 30,000 crore in FY26 from Tk 14,000 crore a year earlier. The dramatic increase in yarn imports reflects:

• 🧵 Competitive pricing — Indian yarn remains cheaper than domestic alternatives
• 🧵 Buyer specifications — international buyers specify particular fabrics or yarn from India
• 🧵 Local mill cost disadvantage — Bangladesh textile mills face higher production costs
• 🧵 Shift from informal to formal trade — land port restrictions channelled previously smuggled yarn through formal Chattogram port imports

"The higher import of yarn through the seaport is the real reflection of yarn imports from India. Because when yarn was allowed to be imported through the land ports, a lot of yarn used to be imported through informal channels, meaning it was smuggled in," Russell said.

Russell said restrictions on yarn imports through land ports should not be lifted. He argued that local textile mills are facing higher production costs and competition from imported yarn — a position that pits BTMA's protectionist interest against the broader apparel export sector's interest in accessing competitively-priced inputs.

🏛 SAFTA Duty-Free Access

India granted Bangladesh duty-free market access in 2010, with one year of retrospective effect, for all products except 25 alcoholic and beverage items under the South Asian Free Trade Area's (SAFTA) least developed country category. Although exports have increased since then, the growth has not been enough to narrow the trade gap — a structural imbalance that has persisted despite the preferential tariff access.

👥 Why Bangladesh's Exports to India Are Limited

M Masrur Reaz, Chairman of the Policy Exchange Bangladesh, identified three factors limiting Bangladesh's exports to India:

• 🏛 India's import-substitute goods — India has its own garment industry competing with Bangladesh
• 📜 Long list of standard requirements — Indian non-tariff barriers limit market access
• 🌏 No regional value chain — both countries could not establish integrated supply chains

He suggested signing the Comprehensive Economic Partnership Agreement (CEPA) between the two countries to expand bilateral trade — a recommendation that has been under discussion for several years without concrete progress.

👥 Industry Reactions

Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said businesses have raised trade-related issues in different forums to increase exports to India. He said Bangladesh should be able to export more goods through land ports and gain greater access to the Indian market.

Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the recent trade disputes have commercial implications but require a political solution. "It needs a political solution from the top-level leaders of both countries," Hatem said.

MA Razzaque, Chairman of Research and Policy Integration for Development (RAPID), said the issue of land ports is part of a wider bilateral relationship. "The land port is not an issue alone; it is a matter of a warm relationship between Bangladesh and India," he said. He said better bilateral relations could support stronger trade because both countries stood to gain from greater commercial engagement.

Md Abdul Wahed, former honorary joint secretary general of the India-Bangladesh Chamber of Commerce and Industry, said trade could increase if the movement of major goods through land ports resumes. Md Fazlul Hoque, Administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), called for discussions between the two countries to ease trade rules.

🌏 Strategic Context

The Bangladesh-India trade pattern reflects broader strategic dynamics:

• 📊 Bangladesh's FY26 total imports: $75.20 billion (India share: ~14.6%)
• 📊 Bangladesh's FY26 total exports: $48.38 billion (India share: ~3.6%)
• 📊 Trade gap with India: ~$9.21 billion
• 📊 Bangladesh-China trade gap: ~$17.5 billion (larger than India gap)
• 📊 FBCCI Chinese investment push: separate strategy to narrow China gap

The combination of large trade gaps with both China ($17.5 billion) and India ($9.21 billion) underscores Bangladesh's broader external sector vulnerability — with the country's export concentration in RMG limiting its ability to balance imports from major Asian trading partners.

🌏 Strategic Implications

The Bangladesh-India trade trajectory carries several strategic implications:

• ⚠️ Widening trade gap: $9.21 billion gap with India strains FX reserves
• ⚠️ Restrictions ineffective: imports continue rising despite policy restrictions
• ⚠️ Yarn import surge: Tk 30,000 crore reflects BTMA-BGMEA sectoral tension
• ⚠️ Political solution needed: BKMEA president calls for top-level engagement
• 💰 CEPA opportunity: bilateral trade expansion through comprehensive agreement
• 💰 SAFTA framework: existing duty-free access underutilised due to NTBs

The Bangladesh-India trade relationship will be a critical element of Bangladesh's broader external sector management through the LDC graduation transition period. With the trade gap continuing to widen despite policy restrictions, the strategic choice will be between continued protectionist measures that have proven ineffective and a more comprehensive CEPA-style engagement that addresses non-tariff barriers and establishes regional value chains — the latter requiring political engagement at the highest levels of both governments.