Sheikh Hasina’s Exit and India-Bangladesh Ties

General Studies Paper-2

Context: Recent exit of Bangladesh’s Prime Minister from power could jeopardise India-Bangladesh relationships and affect growing trade ties, restricting the movement of people and goods, and stalling a potential free trade agreement (FTA) between the two countries.

India-Bangladesh Ties

• 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.
• 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’.
• 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.

Bilateral Trade

• Significance: Bangladesh is India’s largest trading partner in the subcontinent, while India ranks as Bangladesh’s second-largest partner in Asia after China.
• Trade Volume: In the financial year 2023-24, their total bilateral trade amounted to $13 billion.

Exports and Imports:

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

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.

Regional Geopolitics

• Influence from Jamaat-e-Islami and Pakistan: Sheikh Hasina’s departure may lead to increased influence from groups like Jamaat-e-Islami, which historically had ties with Pakistan. This could impact regional dynamics and stability.

Other Ongoing Issues and Concerns

• Teesta dispute: The issue revolves around the sharing of Teesta’s waters, with Bangladesh seeking an equitable distribution.
• Rohingya issue: The Bangladesh government aims for the peaceful repatriation of Rohingyas to Myanmar, but it’s talks with the military junta have been unsuccessful so far.
• Cross-border terrorism and infiltration are additional threats to internal security. The rise of majoritarian forces adds another layer to the complex landscape.
• China Factor: India’s concern is the deepening relationship between Bangladesh and China, marked by the substantial Chinese investments in infrastructure in recent years.

Conclusion

• Bangladesh’s Prime Minister resignation introduces complexities and challenges for India-Bangladesh relations. The movement of people, goods, and the progress of critical agreements like the FTA hang in the balance.
• As the situation unfolds, both countries will need to navigate this transition carefully to maintain their positive trajectory of cooperation and friendship.