Why India-Bangladesh economic relations are at their warmest yet – and what could trip things up

Bangladesh relies on India’s backing in tackling terrorism and economic issues, while Bangladesh is key to Modi’s vision of economic connectivity
But long-standing water disputes and Bangladesh’s warming ties with China may become areas of concern

Rupakjyoti Borah

Published: 9:45am, 12 Apr 2021

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Indian Prime Minister Narendra Modi’s recent visit to Bangladesh, his first foreign visit since the Covid-19 pandemic broke out, marked an important step forward in warming bilateral ties. Under the governments of Modi and Sheikh Hasina, relations are at an all-time high and many border disputes have been settled amicably.

The two countries signed a landmark land border agreement in 2015 and have also agreed on a maritime border after accepting the arbitration verdict under the United Nations Convention on the Law of the Sea in July 2014.

The South Asian neighbours have good reasons to wish for a flourishing relationship. Bangladesh has made great economic strides in recent years and is expected to soon graduate from the UN list of least-developed countries. Good ties with India are important to support its continued economic progress.

Second, Prime Minister Sheikh Hasina’s government has been hounded by Islamists and India’s backing is important. Home-grown terrorism remains a threat and memories are still fresh of the 2016 Holey Artisan cafe attack in Dhaka, in which 22 people, mostly foreigners, were killed.

Islamist group Hefazat-e-Islam’s activists enforce a general strike in Narayanganj, Bangladesh, on March 28, called to denounce the deaths of four people in clashes with police during Modi’s visit. Photo: AP

Third, since coming into power, Modi has been keen to promote good relations between India and the other members of the South Asian Association for Regional Cooperation (SAARC), in what has been described as a “neighbourhood first” foreign policy.

This was seen in the unprecedented move to invite SAARC heads of state to his inauguration in 2014. Modi has had very little success with Pakistan and Nepal – but the reception he received in Bangladesh has been different.

Fourth, Bangladesh is a critical element in both the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and in the economic development of India’s northeastern region, which is a key focus area of Modi’s government.

This region originally had access to the sea but after India’s independence in 1947 and the later creation of Bangladesh, it became landlocked. The Modi government has reinstated some of the earlier rail corridors between the two countries in a bid to unlock economic development in its northeast.

Last month, Modi inaugurated the Maitri Bridge – its name means friendship – between Sabroom in the Indian state of Tripura and Ramgarh in Bangladesh. It is worth noting that Chittagong Port in Bangladesh is only some 80km from Sabroom.

Fifth, India and Bangladesh have drawn closer in recent years through their projects, including along the Petrapole-Benapole border, a massively important bilateral trade conduit, the Fulbari corridor with Banglabandha, Bangladesh’s three-way trading post with Nepal and Bhutan, and the Dawki-Tamabil crossing, mainly used to transport coal.

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India, which has not joined China’s Belt and Road Initiative, is interested in promoting its own vision of connectivity through its infrastructure projects. Significantly, it is also working on infrastructure projects with Japan, another country not in the belt and road plan. There is also the Bangladesh, Bhutan, India, Nepal Initiative, which aims to improve connectivity between these countries.

However, there are also a number of issues of concern in the India-Bangladesh relationship. For one, Bangladesh is part of the Belt and Road Initiative and its largest trading partner is China, with bilateral trade of more than US$12 billion during the 2019-20 financial year. Should Bangladesh get closer to China, warning bells would sound in New Delhi.

Chinese Premier Li Keqiang and Bangladeshi Prime Minister Sheikh Hasina review an honour guard during a welcome ceremony at the Great Hall of the People in Beijing, on July 4, 2019. Photo: AP

Second, India and Bangladesh have a long history of disputes over the sharing of the water in their trans-boundary rivers, including a long-standing quarrel over the Teesta River, which can take on political overtones. This may have an impact on the burgeoning economic ties between the two.

The road ahead is complex. Economic relations between these two South Asian countries is warm and improving but much will also depend on their domestic polity. Still, in making Bangladesh his first foreign stop since the pandemic, Modi has shown a strong interest in boosting India’s economic ties with Bangladesh – and building on his government’s neighbourhood-first foreign policy. As they say, “it’s the economy, stupid”.

Dr Rupakjyoti Borah is a senior research fellow at the Japan Forum for Strategic Studies, Tokyo. The views expressed here are personal