India’s Trade Restrictions May Reshape Bangladesh’s Employment Landscape: ILO Warns of Long-Term Effects

May 19, 2025: India’s recent trade restrictions on Bangladeshi imports could have long-term implications for employment in Bangladesh, according to Tuomo Poutiainen, Country Director of the International Labour Organization (ILO) in Dhaka.

Speaking to reporters as his tenure in Bangladesh concluded, Poutiainen noted that the immediate impact may be minimal due to the large proportion of employment in the informal economy, including agriculture and low-skilled sectors.
“Much of Bangladesh’s employment is in areas that may continue independently,” he said. However, he warned that formal businesses and the broader trade-dependent employment structure could face pressure in the long run.

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“Bangladesh must continuously calibrate its approach—focusing on employment skills, export diversification, and the quality of labour in line with its trading partners’ evolving standards,” he added, stressing the importance of strategic trade negotiations.

His remarks follow a significant move by India’s Ministry of Commerce and Industry, which on Saturday imposed immediate restrictions on imports from Bangladesh through land ports. Acting on a directive from the Directorate General of Foreign Trade (DGFT), the restrictions now limit key exports like ready-made garments and processed foods to only Nhava Sheva and Kolkata seaports, effectively shutting out land port access.

According to the Global Trade Research Initiative (GTRI), the restrictions will impact Bangladeshi exports worth USD 770 million, nearly 42% of total bilateral imports from Bangladesh.

The move is widely seen as a retaliatory measure following Bangladesh’s recent curbs on Indian imports, including yarn and rice, and its decision to impose a transit fee on Indian cargo—marking a shift in the previously cooperative trade dynamics between the two neighbours.

The ILO emphasized that for Bangladesh to remain competitive and safeguard employment, a proactive understanding of global trade trends and responsive economic policies are critical.