Bangladesh Prime Minister Sheikh Hasina was the first guest on a bilateral visit India received from the neighbourhood after the National Democratic Alliance government led by Prime Minister Narendra Modi took over power in New Delhi. This visit had been pending for some time due to the Indian parliamentary election. Hasina was elected for the fourth consecutive term in January in an election boycotted by the opposition.

Bilateral and beyond

The bilateral relationship has been on the upswing since 2007 when the military-backed caretaker regime was in power. The relationship strengthened and bolstered further during the Hasina regime. The main pillars of this bilateral relationship have been zero tolerance for terrorism, regional connectivity for further trade, and regional integration. In this context, India has extended the $8 billion Line of Credit for upgrading the transport network to restore the connectivity that existed prior to the 1965 India-Pakistan war. The sixth cross-border rail link between Agartala and Akhaura was inaugurated in November last year.

Bilateral relations have flourished, given the political will of the two countries. Both have forged development partnerships, and the Indian-funded projects are monitored by the foreign ministers of the two countries to hasten the process so that the delay in implementing the projects can be addressed at the highest level. India is also implementing 93 High-Impact Community Development Projects (HICDPs) amounting to $50 million, which are basically grant projects.

Trade has increased exponentially, touching around $14 billion from $2 billion in 2007 prior to Hasina coming to power. India has extended duty-free access to several items that help Bangladesh’s garment industry. To overcome the dollar crisis that plagued most of the countries post-Covid-19 as foreign reserves shrunk, India has introduced trade in rupees. As reported, “Trade settlement through Indian rupee will only apply to export amount from Bangladesh while the rest of imports from India will be settled in US dollars”.

There has been criticism that the trade is in India’s favour and that India needs to import more from Bangladesh. Notably, Bangladesh’s trade with India, was a mere $80 million a few years back; now, it has touched nearly $2 billion as it emerges as the largest trading partner in South Asia. While connectivity, like the use of waterways and railways, has boosted trade, non-tariff barriers and phytosanitary measures are major challenges to growth in bilateral trade. In nearly a decade or so, capacity-building measures have helped the Bangladesh Standard Testing Institute control the quality of products that are being exported to India. The “e-suvidha” portal has also helped ease border congestion, where truckers used to wait for 2-3 days to unload the goods.

Operationalising Chittagong and Mongla Ports in 2023 would help North East India, Nepal and Bhutan export their products. Both countries are discussing signing a Comprehensive Economic Partnership Agreement. Bangladesh is already in talks with China to sign a Free Trade Agreement, which will be discussed during Hasina's visit to China starting July 8.

Why this visit is important

This visit is important for several reasons. First, high-level engagement between the two countries always helps in building trust and confidence and ironing out differences on issues. Both countries emphasised “future-oriented partnership”, and Bangladesh considers itself an “indispensable partner in the development of India’s northeastern region”. The Bangladesh, Bhutan, India, Nepal (BBIN) connectivity was emphasised as the two countries decided to commence goods-train service from Gede-Darshana through Chilahati-Haldibari up to Hasimara via Dalgaon railhead near the Bhutan border. India will provide financial assistance to the Katihar-Parbatipur-Bornagar interlink for grid connectivity.

River water sharing has been a major issue. India has not been able to sign the Teesta treaty due to West Bengal’s opposition. Bangladesh has raised this issue several times. During this visit, India has proposed to conserve and manage the Teesta River inside Bangladesh with Indian assistance within a mutually agreed-upon timeframe. India’s proposal came after the Chinese proposed $1 billion for embarking and dredging Teesta as well as building a reservoir to conserve water in 2020.

China Power has completed the Teesta survey. Prime Minister Hasina has said that Bangladesh’s interest as well as its financial feasibility, will be kept in mind while considering the two proposals. Bangladesh’s Foreign Ministry, in a statement, said it will evaluate geopolitical considerations when making a decision on both the proposals. India is concerned about China’s involvement in Teesta, which is very close to the Siliguri corridor.

The Ganges water treaty will expire in 2026. Both countries have set up a joint technical committee to examine the renewal of this treaty. Meanwhile, in a letter to Prime Minister Modi, the West Bengal Chief Minister has raised the state’s concerns regarding water sharing with Bangladesh and accused the central government of not consulting the state. The Ganges Water Treaty, signed in 1996, had the support of the then Chief Minister of West Bengal, Jyoti Basu. Politics over water has largely impacted bilateral relations. The Farakka barrage was a major bone of contention until the signing of the treaty in 1996. Bangladesh, under the BNP government, raised the issue at the Non-Aligned Movement (NAM) Summit and at the UN long ago.

Bangladesh is ranked ninth globally for climate disaster risk in the World Risk Index 2023. Bangladesh will co-lead the “Disaster Risk Reduction and Management” pillar of the Indo-Pacific Oceans Initiative. Prime Minister Hasina has always championed climate change issues in international forums, given Bangladesh's vulnerability to global warming and frequent cyclones.

Opposition and Hasina’s balancing game

The opposition political party, the Bangladesh Nationalist Party (BNP), which had boycotted the 2024 January parliamentary election, has been extremely critical of Prime Minister Hasina’s visit to India. The reactions are on the expected lines, as the party has pursued an anti-India stance since its inception. The BNP has always accused Hasina of selling sovereignty, being an “Indian agent”, and equated connectivity with India as undermining Bangladesh’s security.

It also accused Hasina of giving India these concessions to remain in power. The BNP holds that India is responsible for the continuation of the Hasina government and the lack of free and fair elections in Bangladesh. Ironically, by not participating in the election both in 2014 and 2024, the BNP has tried to undermine the electoral process in the expectation of external intervention. Some of its leaders supported a recently orchestrated “India out” campaign that was started by a Bangladeshi living in France, which did not have much traction domestically.

Both China and Russia stood strongly behind Hasina and supported the January election. Yet, in populist politics, any opposition to India has domestic resonance, and political parties expect to harness this to bolster their political stance against the ruling party. As Hasina embarks on a visit to China after 10 years, from July 8-11, this will be closely watched in New Delhi. Yet she is the only South Asian leader who has deftly tackled the India-China contest for influence and navigated the murky waters of diplomacy to benefit by engaging both countries and balancing their interests.