Change in Bangladesh, the Challenges for India

August 13, 2024

General Studies Paper-2

Context: Recent crisis in Bangladesh could jeopardise its relations with India and affect growing trade ties, restricting the movement of people and goods, and stalling a potential free trade agreement (FTA) between the two countries.

Background (India-Bangladesh Ties)

v Beginning: India’s relationship with Bangladesh is anchored in common history, heritage, culture and geographical proximity, the foundation of which was laid in the 1971 Bangladesh Liberation War.

v India provided critical military and material support to assist Bangladesh in its fight for independence from Pakistan. It became a primary factor in shaping the newly independent nation’s policy, as acknowledged by ‘Bangabandhu’ Sheikh Mujibur Rahman: ‘Friendship with India is a cornerstone of the foreign policy of Bangladesh’.

v But There was a rise in anti-India sentiment in the mid-1970s over issues ranging from boundary disputes and insurgency to the sharing of water.

v Back in February 2009, then-Prime Minister Sheikh Hasina faced a significant crisis within just two months of taking office.

v The mutiny of the Bangladesh Rifles (BDR), a paramilitary force, resulted in a loss of lives and posed a direct threat to the newly elected government.

v Fast forward to 2024, and we find Bangladesh facing a different set of challenges.

v Sheikh Hasina, who has been a key ally to India since coming to power in 2009, has played a crucial role in fostering a healthy relationship between New Delhi and Dhaka.

v During her tenure, efforts were made to eradicate anti-India terrorist groups that operated from safe havens in Bangladesh.

v Additionally, economic, social, and cultural ties between the two countries flourished.

v However, her recent resignation as Bangladesh’s Prime Minister introduces uncertainties that could affect bilateral relations in several ways.

Bilateral Trade

v Significance: Bangladesh is India’s largest trading partner in the subcontinent, while India ranks as Bangladesh’s second-largest partner in Asia after China.

v Trade Volume: In the financial year 2023-24, their total bilateral trade amounted to $13 billion.

Exports and Imports:

v Bangladesh is the biggest export destination for India’s cotton, accounting for 34.9% of India’s total cotton exports (some $2.4 billion in FY24). Other major Indian exports to Bangladesh are petroleum products and cereals.

v India’s top import from Bangladesh are readymade garments, amounting to $391 million in FY24.

Recent Developments

Elections and Disconnect: The 2024 elections in Bangladesh were marked by the Opposition’s boycott, limited democratic space, erosion of human rights, economic downturn, and high youth unemployment.
- These factors contributed to a growing disconnect between the government and its people, especially the youth who had previously benefited from economic growth under Prime Minister Hasina.
Student Protests: When students’ protests erupted, the government’s handling of the situation—almost treating protesters as enemies of the state—sealed Prime Minister Hasina’s fate. The use of violence further exacerbated tensions.

Bangladesh Army’s Role

Changing Landscape: Unlike in 2007, when the army intervened to restore order, the situation in 2024 is different.
- The army now appears to be facilitating the will of the people by removing a beleaguered Prime Minister and restoring democratic processes.
Vulnerability and Responsiveness: This shift has made the army more vulnerable and responsive to public opinion. General Waker-uz-Zaman, the current Bangladesh Army chief, faces a delicate balancing act.

India’s Stakes

Historic Ties: India and Bangladesh share deep-rooted bonds of history, language, and culture. Their bilateral relations have evolved into a model for the entire region.
Recent Interactions: In 2024, there were several high-level interactions between the two countries. Prime Minister Modi reaffirmed people-centric cooperation, and Bangladesh’s Foreign Minister Dr. Hasan Mahmud visited India.
- Both leaders participated in virtual summits and inaugurated the India-Bangladesh Friendship Pipeline.
Vaccine Cooperation: India assured Bangladesh of vaccine availability as soon as they are produced domestically.

Free Trade Agreement (FTA) Discussions

In October 2023, India and Bangladesh initiated discussions on a FTA during a meeting of the Joint Working Group on Trade in Dhaka. An FTA would reduce or eliminate customs duties, promote further trade, and facilitate investments.
- A 2012 working paper published by the World Bank estimated that a full FTA for goods would increase Bangladesh’s exports to India by 182%, whereas a partial FTA could lead to a 134% increase.
- However, an FTA accompanied with improved transport infrastructure and better connectivity could see Bangladesh’s exports rise to 297%.
- India, too, would see an increase to its exports by as much as 172% in this scenario.
Potential Impact: Sheikh Hasina’s departure could stall progress on the FTA, affecting market access and economic ties between the two nations.

Infrastructure and Connectivity

Growing Ties: Infrastructure development and connectivity have been crucial aspects of India-Bangladesh relations.
Lines of Credit: India extended three lines of credit to Bangladesh since 2016, totaling $8 billion. These funds were earmarked for road, rail, shipping, and port infrastructure development.
- The Akhaura-Agartala rail link was inaugurated that connects Bangladesh and the northeast through Tripura.
- It is likely to boost small-scale industries and develop Assam and Tripura.
- The Maitree Express connecting Kolkata with Dhaka was started in 2008 after a hiatus of over 40 years.
- Bangladesh is also part of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) which has its headquarters in Dhaka.
Uncertainty: With an interim Bangladeshi government in place, the continuity of these infrastructure projects remains uncertain.
Regional Stability: Stable infrastructure and connectivity contribute to regional stability and economic growth.
- A disruption in Indo-Bangladesh ties could thus restrict India’s access to the Northeast, which will be connected to mainland India only through the narrow ‘Chicken’s Neck’ — only 22 km at its narrowest — between West Bengal and Assam.

Challenges for India

Stability and Fundamentalism: Bangladesh’s escalating protests, financial crisis, and rising fundamentalist forces pose challenges for regional stability. India must closely monitor these developments.
Refugee Crisis: Any instability in Bangladesh could spill over into India, affecting border security and potentially leading to a refugee crisis.

Conclusion

India needs to navigate this changing landscape in Bangladesh carefully. Strengthening bilateral ties, supporting stability, and addressing shared challenges are crucial for both nations.
As the situation unfolds, both countries will need to navigate this transition carefully to maintain their positive trajectory of cooperation and friendship.