Tonnes of Bangladeshi cargo is moving through India’s international airport in the capital Delhi, as exporters from Dhaka take over the space to reach their customers in Europe and the United States.
In the last one year alone, more than 8,000 metric tonnes (80 lakh kgs) of readymade garments, handlooms, jute craft, and footwear were exported to global markets through DIAL (Delhi International Airport Limited).
The volume of exports is so massive that Indian firms are struggling to cope.
According to the Indian Apparel Export Promotion Council (AEPC), “Almost 20-30 loaded trucks from Bangladesh arrive in New Delhi every day.” It slows down freight movement, delays handling and processing of export cargo, and causes congestion at the airport terminal, the AEPC said.
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In fact, it has sent a formal request to the Central Board of Indirect Taxes and Customs (CBIC) to immediately suspend shipments by Bangladeshi exporters via Delhi.
The issue has become a big challenge for Indian exporters, the AEPC alleged.
“Nowadays it is very difficult to get space in aircraft for our export consignments,” a leather goods manufacturer was quoted as saying in an article published by The Hindu. “If we pay a premium, we get space.”
According to Sudhir Sekhri, chairman of AEPC, Indian apparel exporters are already bearing the brunt of the continuing Red Sea crisis. “It has raised logistical costs and shifted consignments from sea to air shipping mode.”
Therefore, permitting Bangladesh to continue transshipments of their cargo has led to a skyrocketing increase in transportation costs for Indian firms, Sekhri said.
Red Sea blues
The Red Sea is the shortest sea route from Asia to Europe.
Close to 15% of international shipping traffic, amounting to $1 trillion every year, 33% of global container traffic amounting to 1,500 commercial vessels monthly, 10% of global oil supply (8.8 million barrels per day), and 8% of global gas supply transit the sea, according to data by the ORF (Observer Research Foundation).
But between December 2023 and March 2024, over 44 ships traversing the Red Sea were bombed by Yemen-based Houthis – part of the “Axis of Resistance” comprising Iran, Hamas, Lebanon’s Hezbollah, and Iran-backed militias in Syria and Iran.
In response, military operations by the US and its allies and the Houthi rebels’ actions have brought down the commercial ships traversing the Red Sea from 50 ships a day in November 2023 to hardly eight ships every day in February 2024.
For Bangladeshi exporters, the Red Sea crisis resulted in an additional 15 days to reach customers in Europe. Earlier, it took 30 days to usually ship goods from Chattogram to ports in Europe.
The tension also forced many exporters to use Indian airports, which offer cheaper options.
Balancing act
India has a trade agreement with Bangladesh that allows sealed export cargo from Dhaka to arrive directly at Delhi airport with minimal border checks.
As a result, Delhi airport’s cargo export rose to 5.17 lakh MT between April last year and January this year, according to data from DIAL. In March this year, Bangladesh accounted for nearly 10% of the total export cargo shipments.
This has led to congestion and spikes in air freight rates by nearly 300%, according to Israr Ahmed, Vice President of FIEO, Bengaluru. It has also upset Indian export businesses.
But officials at the Delhi airport disagree. They believe that transshipments from Bangladesh are helping make airlines more equipped to handle bigger cargo, enhancing their capacity. This, in turn, has provided a balancing act for Indian firms, who have more options now in terms of capacity, as well as destinations.
However, apparel exports in India are facing tough competition from Bangladesh. The country’s apparel exports slid 3.46% year-on-year in January. Merchandise exports also fell for the first time in four years in 2023-24, according to official data, hit by several factors including geopolitical tensions.
Fresh on this concern is also the Iran-Israel conflict, which is piling up even more pressure on trade supply chains.
From Dhaka’s perspective, this would add to the already increased volumes of Bangladeshi goods transported through Indian airports – almost 350 to 500 tonnes per month. But transshipments through India has the advantage of direct flights to most Western countries, against the option of connecting flights from Dhaka, said a Dhaka-based exporter.
For Delhi airport, Bangladesh export firms have created a massive volume of international export cargo, helping strengthen the airport’s position as an international freight hub for handling export cargo. The move has boosted exports of a spectrum of products from readymade garments and handlooms to footwear, leather products, jute products, and pharmaceuticals. Readymade garment exports contributed 84.5% of Bangladesh’s total exports, valued at nearly $47 billion in the 2022-23 financial year, according to data shared by the Bangladesh government.
However, this has resulted in increased cargo rates for Indian exporters – from Rs250 to Rs465 per kilo, says Delhi-based Darpan Thakar, founder of 16th July clothing manufacturing firm. In an interview with Indian business portal, The Core, Thakar lamented, “Previously, our cargo was shipped the next day of booking a shipment, but now we have to wait roughly 10 days for our shipments to be exported.”
