Anchoring India’s Act East Policy Through Bangladesh – Analysis


Sheikh Hasina’s party has won the Bangladesh Elections 2018 which gives her third consecutive term as Prime Minister of Bangladesh. For India, this augurs well both for providing a fillip to BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation comprising the countries of Bangladesh, Bhutan, India, Nepal, Sri Lanka as well as Myanmar and Thailand) and for India to Act East through Bangladesh.

Given the importance of India’s North East for powering its Act East policy, India’s age-old relations with Bangladesh are also witnessing a fresh momentum with various ongoing initiatives.

First, in terms of connectivity, there is trans-shipment of Indian goods through Bangladesh’s Ashuganj port to Northeast India, expanding of rail links within Northeast India and between the two countries, the BBIN (Bangladesh, Bhutan, India, Nepal) Motor Vehicles Agreement which has the potential to substantially reduce the cost of transportation between Northeast India and the rest of India. Undoubtedly, enhanced welfare of the Northeast is a welcome outcome. India, in 2015, also sanctioned Rs. 1000 crores for a 15 km India-Bangladesh rail link that would help to reduce the 1,650-km distance between Agartala and Kolkata to 515 km; i.e once the rail track is constructed through Bangladesh.

Second area is that of digital connectivity, for which Northeast India is being provided with Broadband connectivity of 10 gbps from Bangladesh’s Cox’s Bazar to Tripura and beyond.

Third, trade relations have improved, with overall trade expected to cross the $9 billion mark, as of May 2018 and Bangladesh’s exports to India will be almost $900 million, riding primarily on ready-made garments. During the past 11 months Bangladesh’s garment exports to India increased by 113 per cent from $129 million to $276 million. Add to this footwear, fish, beverages etc and India’s imports from Bangladesh increased by a 30 per cent. Since 2011, India’s (dollar value) imports from Bangladesh grew an average of 6% per year over 2012-16, even as its imports from the world dropped by 8% per year.

Investment is the fourth area. At a national level, India is a growing investor in Bangladesh, and now has land earmarked for development of special “Indian economic zones” in Bangladesh. During Prime Minister Sheikh Hasina’s visit to India in 2017, it was confirmed that India will invest up to $10 billion in Bangladeshi sectors including infrastructure and medicine and will provide $5 billion in loans, including $500 million in military assistance.

“The offers of investment and loans were given by the Indian government and private entrepreneurs during my visit to New Delhi,” she told reporters during a news conference. “Both investments and credit will be used for the development of several sectors including power and energy, logistics, education, medical, infrastructures and rail, road and waterways,” she added.

Fifth, energy cooperation is now at the centre of New Delhi’s biggest business commitments, with power and gas leading the $9-billion investment projects India has proposed to make in Bangladesh to help strengthen Dhaka’s emerging industrial base. The Reliance and Adani Groups, and the flagship power corporation National Thermal Power Corporation (NTPC) were among the Indian blue-chip companies that concluded investment proposals thus ensuring that cross-border power connectivity has emerged as the key bridge of friendship between the two countries over the past few years.

India already exports 600 MW of power (including 100 MW from Tripura) to Bangladesh, and much more is in the offing. In the future, this energy trade could well link up with potential hydropower exports from Bhutan and Nepal to form a BBIN (Bangladesh, Bhutan, India and Nepal) power market. Deeper cooperation would also facilitate access to energy supplies through projects such as the natural gas pipeline linking Myanmar to India via Bangladesh.

Sixth, in terms of connectivity with ports, the Bangladesh Cabinet in September 2018, has approved use of its Chattogram (earlier known as Chittagong) and Mongla ports for Indian shipments to north-eastern states of India. The agreement will provide India access to Bangladeshi ports to carry goods to the landlocked North Eastern states in a very short time. The Chattogram port is the busiest seaport on the coastline of Bay of Bengal, which handles around 90% of import-export trade of Bangladesh. Mongla port is the second largest port of the country and it is located in Bengal Delta. This is a major boost for India’s connectivity both with the North east as well as with Myanmar and beyond.

In an interview published just five days before the elections, in The Hindu newspaper of Dec 26, 2018, Professor Gowher Rizvi, foreign policy adviser to the Sheikh Hasina Government, spoke of the various initiatives taken by the two countries in the past years.

In his words, “In the last decade the relationship between the two neighbors has reached new heights– virtually almost all outstanding issues have been amicably settled including demarcation of boundaries, resolution of adverse territorial possessions including ‘teen bigha’ and the enclaves; cross-border purchase of electricity; joint power ventures, significant Indian private investments in Bangladesh industries; and untied line of credit amounting to nearly 8 billion dollars. Buses are running from Shillong and Guwahati to Kolkata via Dhaka; direct passenger and goods trains have started to operate again; the waterways are being renovated to enable commerce through riverine routes; and the agreement on coastal shipping has cut the cost of cargo massively. The benefits of connectivity – road, air, rail, river and ICT– is fostering sub-regional cooperation and bringing benefits to India, Bangladesh, Nepal and Bhutan. We are rebuilding the linkages, especially through river and road, the links which were destroyed in 1965 Pakistan-India war, and visa regime is enormously eased. Even though the adverse trade balance prevails, Bangladesh exports to India has almost quadrupled in the last couple of years.”

When questioned on the unresolved issue of the Teesta water agreement, he said, “Indeed, the Teesta water agreement has not yet been signed. But it is important to understand that an agreement on water-sharing has been arrived at; and as far as we are concerned there is no question of re-negotiating the agreement.” On China, Dr. Rizvi confirmed that although Bangladesh considers China as a development partner, it will not allow its territory to be used by one country against another. With respect to the Rohingya issue, he underlined the imperative for international sanctions on Myanmar, but confirmed that no refugee would be repatriated to Myanmar until the country was safe for their return.

Thus, the importance of Bangladesh for India’s initiatives for BIMSTEC and ASEAN cannot be overemphasized. Moreover, with Prime Minister Sheikh Hasina providing leadership in India’s Eastern neighbor, India feels assured of peace and security in its North East.

*Dr. Reena Marwah
ICSSR Senior Fellow; [email protected]

Dr. Reena Marwah

Dr. Reena Marwah has published over 20 books; she is the author of Reimagining India-Thailand Relations, published in 2020; World Scientific Publishers, Singapore. She is a Professor at Jesus and Mary College, University of Delhi.

Leave a Reply

Your email address will not be published. Required fields are marked *