India-Bangladesh Trade Sees Sharp Cargo Movement Contraction

India and Bangladesh, a lifeline for regional commerce, is currently experiencing a significant downturn, marked by a sharp 45 per cent year-on-year contraction in cargo movement by rail during the fiscal year 2025.

This substantial decline, alongside a 20 per cent reduction in cargo transported via the India-Bangladesh Protocol Route (IBPR) waterways, underscores a complex interplay of political instability, shifting trade directives, and evolving demand dynamics impacting the historically robust bilateral relationship. Official data from Indian Railways indicates a dramatic fall in average daily rake counts to 0.92 in FY25, a stark contrast to 1.64 in FY24. This translates to roughly 330 rakes transporting goods to Bangladesh in FY25, down from nearly 600 in the preceding fiscal year. Senior railway officials attribute this slump not only to a demand contraction in the neighbouring market, evident in the high number of empty return rakes from Bangladesh, but also to a lingering overhang of bilateral trade tensions and periods of political upheaval that led to temporary trade suspensions along certain corridors.

Bangladesh’s position as India’s largest trading partner in the subcontinent, with a total trade turnover reaching $12.90 billion in FY24, underscores the gravity of this contraction. India, in turn, is Bangladesh’s second-biggest export partner, accounting for 12 per cent of its total exports. The economic implications of such a sharp decline are far-reaching, impacting supply chains, local economies, and potentially influencing the pricing of various commodities across both nations.

The political volatility in Bangladesh has played a significant role, with India suspending passenger and cargo train movements since July 2024. While limited cargo operations resumed in select segments months later, the impact has been profound. For instance, in August 2024, amidst intensifying turmoil, only 17 rakes moved from India to Bangladesh, a stark contrast to 52 in the same month of the previous year. Although some recovery was noted from September onwards, the fragility of the trade channels remains evident.

Trade flows between the two nations primarily rely on three key railway corridors: Gede–Darshana, Petrapole–Benapole, and Radhikapur–Birol, with the latter resuming freight operations only in February 2025. All three land ports, strategically located in West Bengal, are critical nodes in the bilateral logistics framework. However, the recent trade directive issued by India on May 17, mandating that garment shipments from Bangladesh be routed exclusively through Kolkata (Khidderpore and Haldia) and Mumbai’s Nhava Sheva seaports, has significantly altered trade dynamics, effectively suspending all other road and rail modes for garment exports. This directive immediately led to 38 trucks carrying garments, valued at approximately ₹6 crore, being stranded at the Benapole border, most of which have since returned to Dhaka. Petrapole, which handles nearly 70 per cent of India-Bangladesh bilateral EXIM trade for other commodities, continues to process agricultural products, FMCG goods, automobile parts, and truck chassis.

The slowdown in construction and infrastructure activities in Bangladesh following the recent regime change has directly impacted commodity demand. Stone loading has declined by 30-40 per cent, gypsum movement has halted completely, and ballast consignments have plummeted by nearly 80 per cent. Clay or kaolin consignments, vital for the cement industry, have ceased entirely, while maize movements are at zero. Conversely, automobile components have surprisingly seen a surge of nearly 50 per cent, and fly ash consignments have increased by around 40 per cent, indicating a shift in demand patterns. Negotiations are reportedly underway to re-allow garment exports through key land ports like Petrapole, with a scheduled garment shipment at Kolkata Port yet to materialise due to bottlenecks in container and barge availability at Bangladeshi ports. This complex scenario underscores the need for robust, transparent, and consistent bilateral trade policies to ensure the long-term sustainability and growth of this crucial economic partnership.

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India-Bangladesh Trade Sees Sharp Cargo Movement Contraction