With Sheikh Hasina's Fall, What Happens To The Ongoing India-Assisted Infra Projects In Bangladesh?

Agriculture items, textiles, including raw cotton and non-retail pure cotton yarn, auto parts, steel, and electricity are among the main items exported by India to Bangladesh.  

“The chunk of items India exports to Bangladesh are essential in nature and key for their economy. They are not luxury items,” Ajay Sahai, director general and CEO, the Federation of Indian Export Organisations (FIEO) told The Secretariat.

“At this point, trade has halted but our understanding is that things will start somewhat improving in a few days..I don’t see any long-term impact on bilateral trade,” Sahai said.

Trade between the two countries, which stood at $13 billion in 2023-24, has been halted for several weeks because of the turmoil. 

Bigger worry for India

But the bigger question is what happens to the ongoing infrastructure and connectivity projects that India and Bangladesh have signed on to? Sources said that the new powers that be in Dhaka  may well review all existing projects and agreements signed between India and Bangladesh.

Since 2016, India has extended $8 billion in credit for several infrastructure projects to develop roads, rail networks, shipping, and ports, key for improving regional connectivity and economic growth. "The worry for India is what happens to those crucial projects," said Subir Bhaumik, a well-known analyst on Bangladesh.

With the rising discontent against Hasina, seen as being backed by New Delhi, anti India sentiments in the South Asian nation which even initiated trade in Indian rupee last year, is at its peak.

“Overall business environment between India and Bangladesh will be severely affected and bilateral relations in the future are set to get complicated,” Bhaumik told The Secretariat. “Whether it is the interim government or the next elected government—the question mark on these projects will crop up."

The Secretariat earlier  reported on the multiple implications of the regime change in Dhaka on Monday. 

Infrastructure projects

Just last year in March, India-Bangladesh Friendship Pipeline was inaugurated to enhance energy security in the region.

Besides, the Akhaura-Agartala cross-border rail link, Khulna-Mongla Port rail line, and Unit II of Maitree Super Thermal Power Plant—all three projects assisted by India were inaugurated in November. 

The two countries that share a 4,096-km long border-- the fifth-longest land border in the world, had gone the extra mile over the last few years to improve trans-border connectivity.

As many as six pre-1965 rail links between the two neighbours were re-started. In 2021, rail connectivity between Haldibari in West Bengal – located just 75 km away from the Chicken’s Neck and Chilahati located across the border in Nilphamari district was restarted after almost 55 years. Rail links between Petrapole (India) - Benapole (Bangladesh), Gede (India) – Darshana (Bangladesh), Singhabad (India) - Rohanpur (Bangladesh), and Radhikapur (India) – Birol (Bangladesh) have been operationalised too.

Last year, Bangladesh allowed India to use Chittagong and Mongla ports to transport goods from Kolkata to the northeastern states. Syama Prasad Mookerjee Port (SMP), erstwhile Kolkata Port was also connected with Mongla and Chittagong ports in Bangladesh and Sittwe port in Myanmar. Kolkata port will also be the main landing point for the Kaladan Multi-Modal Transit Transport Project (KMTTP), being built by India in Myanmar.

The under-construction Matarbari deep-sea port in Bangladesh, once completed, was also expected to boost connectivity in India’s northeast.Though the port is being primarily funded by Japan International Cooperation Agency (JICA), the stakes are high for India.

A large number of Indian companies have invested heavily in Bangladesh and these include Tata Motors, Adani Power, Marico, VIP Industries, Dabur, Asian Paints, and Hero Motocorps.

While India may not have a direct financial stake in the port, its involvement encompasses critical elements such as policy coordination, strategic consultations, and potential collaboration in relevant sectors,  National Maritime Foundation said.  “India’s engagement should, indeed, be understood within the broader context of Indo-Pacific regional dynamics wherein India’s objectives include promoting regional connectivity, fostering economic cooperation, and countering China’s growing influence,” it added.

Amid the current political uncertainty in Bangladesh, India is likely to adopt a wait and watch policy. “It will have to play its cards carefully after weighing all pros and cons and importantly refrain from any immediate reactions,” an analyst who did not wish to be identified said.

Several states including West Bengal, Assam Meghalaya, Tripura and Mizoram have international borders with Bangladesh. The uncertainty, therefore will have direct ramifications on these states.

A stable and developing Bangladesh, therefore, is crucial for India.