Rushali Saha
When Indian Prime Minister Narendra Modi met Bangladesh’s interim leader Muhammad Yunus at the sidelines of the BIMSTEC summit in April — their first official meeting since Sheikh Hasina’s government collapsed in August 2024 — hopes rose for a breakthrough in strained bilateral ties. However, relations have since hit a new low, especially with Dhaka abruptly canceling a $21 million contract for an advanced ocean-going tug with an Indian state-run shipbuilding firm, Garden Reach Shipbuilders and Engineers Ltd (GRSE), reportedly without any explanation.
Dhaka’s move comes at a time when India and Bangladesh have been implementing reciprocal trade restrictions, since New Delhi withdrew its transshipment facility for Bangladesh three days after the Bangkok meeting. More recently, as part of the tit-for-tat measures, New Delhi announced its decision to impose restrictions on the export of readymade garments and other specified commodities from Bangladesh via land ports. Roughly a month earlier, Dhaka had banned yarn and rice imports from India through the same land routes.
Bangladesh is the world’s 26th largest arms buyer. Several countries, including India, have been eyeing the Bangladesh defense market, as Dhaka procures almost all its medium-sized and heavy war equipment from foreign countries. Much to New Delhi’s discomfort, China has long been a dominant player in this space, with Beijing accounting for 82 percent of the total arms imported by Bangladesh between 2009-2013.
Under the Hasina government, some progress was seen in defense ties with India, notably the signing of an MoU on the framework for defense cooperation in 2017. New Delhi also reassured Dhaka of support for the modernization and capacity-building of the Bangladesh armed forces as part of its Forces Goal 2030 program. Bangladesh’s former Foreign Minister Hasan Mahmud had indicated that Dhaka was keen to continue purchasing defense equipment from India. According to Indian reports, citing unnamed official sources, Bangladesh had even shared a “wish list” of military platforms and systems that its armed forces wanted to procure from India.