Bangladesh's Growing Alignment with China
Bangladesh recently altered its foreign policy focus, and it received a $2.1 billion promise of investment in infrastructure, green energy, artificial intelligence, and technology from China. This marks a growing coordination between Bangladesh and China and pitting it against India, traditionally a close strategic and economic friend of Bangladesh.
During his visit to Beijing, Bangladesh's caretaker Chief Adviser, Muhammad Yunus, emphasized that the nation wished to get investments and not loans. Chinese President Xi Jinping was quoted as having promised Bangladesh to lower the interest on existing loans as he encouraged the relocation of Chinese production bases to Bangladesh. This is all under China's broader Belt and Road Initiative (BRI) geared towards deepening Beijing's influence across South Asia.
Further, China is investing $400 million to modernize Mongla Port and $350 million on the China Industrial Economic Zone at Chattogram, keeping aside another $150 million for technical assistance (source).
India-Bangladesh Economic Relations: A Shift in Trade
India has always remained Bangladesh's biggest trade partner in the subcontinent. In FY24, bilateral trade turnover between the two nations stood at $12.9 billion. India remains Bangladesh's second-biggest export partner with a 12% share of Bangladesh's total exports.
But new trade statistics reveal a decline in economic activity. Exports of Bangladesh to India plunged 8.47% to $1.84 billion, and Indian imports fell 9.45% to $11.06 billion. Analysts attribute it to Bangladesh's import contraction measures in the context of a dollar crisis (source).
India has invested heavily in its relationship with Bangladesh by establishing economic corridors, new transport networks in the form of roads and railways, and border land ports to facilitate trade. But growing economic engagements between Bangladesh and China could change regional trade patterns.
Political Fallout: India's Northeast Reacts
The growing closeness of Bangladesh to China has created political tensions within India, particularly in the country's northeastern part. Recent remarks by Muhammad Yunus regarding Bangladesh being strategically significant as an entry point to the Indian Ocean have created outrage from Indian leaders.
Assam Chief Minister Himanta Biswa Sarma and other northeast politicians have criticized Yunus's statement as an implied threat to India's territorial integrity. Even some political voices in the region have gone on to advance contentious demands for the breakup of Bangladesh, raising concerns over China's growing influence in the region (source).
In an attempt to diffuse the tensions, Khalilur Rahman, Yunus's aide later clarified that the statement had been misquoted and wasn't meant to demean India's northeastern states (source). All this has barely succeeded in halting the growing suspicions in India's political circles.
Strategic Concerns: The 'Chicken's Neck' Corridor
India's northeastern states, connected with the rest of India by the slender Siliguri Corridor (informally known as the "Chicken's Neck"), are geographically exposed strategically. The corridor is only about 22 kilometers at its narrowest point, and therefore extremely strategic.
Bangladesh's growing ties with China have reignited concerns that Dhaka can utilize its strategic location to flex its muscles in India's northeast. If China gains greater access to Bangladesh's infrastructure, India might find its northeastern states becoming even more vulnerable to geopolitical heat.
And, as a countermove, Indian officials are encouraging alternative connectivity plans, such as enhancing road links through Myanmar and Bhutan and accelerating local infrastructure development in the northeast.
Future Outlook: Will India and Bangladesh Sustain a Close Alignment?
Despite tensions, economic and cultural ties between India and Bangladesh are strong. Bangladesh has duty-free access to India under the South Asian Free Trade Area (SAFTA) agreement. India is also a major investor in Bangladesh's transport and energy sectors.
However, with China increasing its profile in Bangladesh, India must implement aggressive diplomacy and economic actions to keep Dhaka's strategic relationship with it intact. It may involve:
- Upsurging Bilateral Commerce: Offering more incentives in trade to keep Bangladesh attracted towards India.
- Heightening Infrastructure Projects: Speeding up India-Bangladesh infrastructure development projects like the Agartala-Akhaura rail connection.
- Increasing Diplomatic Outreach: India must maintain its diplomatic ties with Bangladesh to counterbalance Chinese influence.
As Bangladesh is making its shift in foreign policy, India will be required to make its own adjustment so that its northeastern regions remain economically and strategically secure. The coming years will be decisive about whether Bangladesh is a powerful ally to India or leans further in China's direction.
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