From Fast Lane to Standstill: How Political Rifts Are Sinking India-Bangladesh Trade

Image Source: Hindu Business Line, India Seatrade News

The once-bustling trade routes between India and Bangladesh have taken a significant hit in FY25. Both rail and waterway cargo movements have seen sharp declines, largely due to political instability, trade restrictions, and shifting dynamics between the two nations.

Key Highlights:

Rail Cargo Decline: Rail cargo traffic between India and Bangladesh plummeted by 45% in FY25. The average daily rake count fell to 0.92, down from 1.64 in FY24. This year, only about 330 rakes were dispatched, compared to 600 last year.
Waterways Impacted: Cargo movement along the India-Bangladesh Protocol (IB) waterways dropped by 20%, mirroring a broader slowdown in trade between the two countries.
Empty Returns: A notable number of freight rakes are coming back empty from Bangladesh, indicating a significant drop in demand and worsening trade imbalances.
Commodity Shifts: Shipments related to construction, such as stone, gypsum, and ballast, have decreased by 30–80%. Some items, like gypsum and kaolin, have completely stopped, while others, like de-oiled cake, saw a 12% decline. On the flip side, exports of automobile components and fly ash have surged by 50% and 40%, respectively.
Trade Disruptions: Political unrest in Bangladesh prompted India to suspend both passenger and cargo train services in July 2024. Limited cargo resumed later, but the volumes remained low. In August 2024, only 17 rakes transported goods, a stark contrast to 52 the previous year. Some recovery was noted starting in September.
Port Restrictions and Stranded Goods: A recent directive from India restricts Bangladeshi exports, such as garments, to just two designated seaports, halting other land and rail routes. This left 38 trucks carrying garments worth ₹6 crore stranded at the Benapole border, most of which had to return to Dhaka.
Bilateral Tensions: The decline is further intensified by mutual trade restrictions, as both countries impose port limitations on essential exports, while Bangladesh shifts its diplomatic focus towards China.
Strategic Corridors: The main railway corridors—Gede–Darshana, Petrapole–Benapole, and Radhikapur–Birol—resumed limited freight operations in February 2025, but overall trade remains subdued.
Economic Significance: Bangladesh is India’s largest trading partner in the subcontinent, with bilateral trade reaching $12.90 billion in FY24. The current disruptions threaten this crucial economic relationship.