Diplomatic ties between Bangladesh and India have remained strained for more than two years, but bilateral trade has continued to show resilience, with Bangladesh’s exports to its neighbour rising in the first two months of the ongoing fiscal year.

Bangladesh exported goods worth $335.2 million to India in July-August of fiscal 2026-27, up 7.67 percent from $311.3 million in the same period a year earlier, according to Export Promotion Bureau data released on Tuesday.

The growth was the highest among Bangladesh’s major non-traditional markets.

Exports to China and Australia each rose 2.51 percent, while exports to Japan fell 0.30 percent.

The figures indicate that political tensions following the fall of Sheikh Hasina’s government on Aug 5, 2024 have not translated into a decline in Bangladesh’s exports to India so far.

Imports from India have also continued.

Tensions intensified after Hasina went to India following her ouster.

In November 2024, the arrest of Hindu religious leader Chinmoy Krishna Das Brahmachari further strained relations.

An attack on Bangladesh’s assistant high commission in Tripura followed, while BJP leaders in West Bengal threatened to stop trade with Bangladesh.

On Apr 4, 2025, then chief advisor Muhammad Yunus and Indian Prime Minister Narendra Modi met on the sidelines of the BIMSTEC summit in Bangkok, but relations did not warm.

Five days later, India withdrew its transshipment facility for Bangladeshi goods bound for third countries through Indian ports.

India subsequently restricted imports of Bangladeshi garments through land ports, allowing them through only Nhava Sheva and Kolkata ports.

Restrictions were also imposed on fruits, flavoured drinks, soft drinks, processed food, plastic products, yarn and by-products and furniture through several land customs stations.

On Jun 27, 2025, restrictions were extended to jute and jute products and cloth.

Most Bangladeshi exports to India move through land ports, particularly Benapole. Bangladesh had earlier restricted imports of Indian yarn through land ports from Apr 15, 2025, to protect its textile and spinning industries.

The tensions even spilled over into cricket. Bangladesh decided not to participate in the T20 World Cup after the BCCI directed Kolkata Knight Riders to release Bangladeshi pacer Mustafizur Rahman from its squad on Jan 3, citing security concerns surrounding him. Mustafizur had been due to play for KKR.

Bangladesh’s trade deficit with India remains above $12 billion.

Its exports to India peaked at $1.99 billion in fiscal 2021-22, before falling 11.63 percent to $1.57 billion in 2023-24.

They recovered by 12.5 percent to $1.76 billion in 2024-25, before edging down 1 percent to $1.75 billion in 2025-26.

Bangladesh’s main exports to India include garments, jute and jute products, leather and leather goods, plastics, yarn and textiles.

Garments account for roughly half of export earnings from the Indian market, while jute and jute products contribute about 25 percent.

Anwar-Ul-Alam Chowdhury Parvez, a former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president and current Bangladesh Chamber of Industries president, said exports could grow further if relations improve, particularly garments, which India would continue importing because of their lower costs.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Fazlee Shamim Ehsan urged greater diplomatic engagement to protect the growing market, while stressing the need to resolve Bangladesh’s gas and electricity shortages.

South Asian Network on Economic Modelling (SANEM) Executive Director Selim Raihan said further export growth was possible, but warned that political tensions could make the positive trend difficult to sustain.

He called for stronger exporter capacity, better negotiation skills and diplomatic efforts to remove what he described as unjustified non-tariff barriers in the Indian market.