The India-Bangladesh relationship, traditionally anchored in shared history, and cemented by India’s pivotal role in Bangladesh’s 1971 Liberation, faces a critical juncture in 2025. Bilateral trade reached almost $12.5 billion in 2024, with India exporting $11 billion worth of goods like cotton and machinery while importing textiles. Security cooperation has also been comparatively strengthened by joint military exercises like “Sampriti,” which has enhanced counter-terrorism efforts and border management along their 4,096-kilometer frontier.
However, the dismissal of previous PM Sheikh Hasina (considered a pro-India leader) in August 2024 marked a turning point. Moreover, her exile to India and the rise of Muhammad Yunus as the interim Chief Adviser introduced uncertainty, compounded by Bangladesh’s outreach to China and Pakistan. The recent events, notably Muhammad Yunus’s provocative statements in Beijing, crystallised these tensions, setting the stage for a potential diplomatic showdown.
Yunus’s Beijing Provocation
Muhammad Yunus’s statement during his visit to “Boao Forum for Asia” in Beijing (March 26-29, 2025), designated Bangladesh as the “only guardian of the ocean” for India’s northeastern states as a “landlocked region of India” with “no way to reach out to the ocean,” positioning Bangladesh as their maritime lifeline: “We are the only guardians of the ocean for this entire region… this invites the potential area for extension of the Chinese economy”.
This can be analysed as a strategic reorientation of Bangladesh’s foreign policy, exploiting its geostrategic position in the Bay of Bengal to pivot towards China amid strained Indo-Bangladeshi relations.
The oratory statement intended to extend economic synchronisation with China, expected via the Belt and Road extensive framework, while subtly contesting India’s regional dominance.
However, it risks Bangladesh as a potential pawn or battleground in the ongoing competition in Sino-Indian rivalries, raising questions of economic sovereignty, the possibility of falling into a debt trap and potential long-term instability influence.
This statement wasn’t a mere geographic remark but a strategic pitch to attract Chinese investment, leveraging Bangladesh’s coastal access to propose industrial and trade corridors linking China to Eastern South Asia.
The political implications were of the greatest intensity. India views the Northeast, connected to the mainland through the “Siliguri Corridor”, as a strategic vulnerability as it’s sensitive to foreign influence. Yunus’s invitation to China a prominent investor, hinted at a potential realignment arousing fears of Chinese infrastructure or even military presence near this critical corridor.
This shift was further emphasised by his extensive remarks, which included calls for a ‘new world order’ and closer Dhaka-Beijing relations, triggering a swift Indian backlash. This has the potential to further involve the region in the deepening of a Great Game in the South East Asia.
India’s Retaliatory Calculus
India’s response was decisive. On April 8, the Central Board of Indirect Taxes and Customs withdrew a 2020 facility allowing Bangladeshi cargo transporters to transit through Indian ports and airports, citing congestion and logistical delays.
This initiative, enacted the day after Yunus’s Beijing speech, was widely considered a reprisal. Those facilities have been instrumental in sustaining Bangladesh’s export-led economy, especially its garment sector, which generates more than 80% of national foreign exchange earnings.
By rerouting shipments through costlier alternatives like Chittagong or other foreign hubs, Dhaka may face economic strain and potentially lose competitiveness to rivals like Vietnam.
India’s rejoinder reflects a challenging strategic calculus, economic leverage as a tool to deter Bangladesh’s pivot toward China. The Northeast’s reliance on Indian ports in West Bengal for trade underscores New Delhi’s control over regional connectivity, a point Yunus’s statement seemingly overlooks.
Despite that, this reprisal could inadvertently question the trade relations with other South Asian neighbouring nations for instance Nepal and Bhutan and may unwillingly test the powers of endurance India’s “Neighborhood First” policy.
In reaction to Muhammad Yunu’s Beijing remarks, prominent political leaders from the northeast condemned his statement as offensive and diplomatically insensitive conceiving it as an attempt to undermine India’s sovereignty and invite Chinese influence in such a sensitive environment.
Assam Chief Minister Himanta Biswa Sarma labelled Yunus’s remarks as “offensive” and “strongly condemnable.” He also emphasised the need for India to expand alternative transport networks to minimise dependence only on the Siliguri corridor. Manipur Ex-Chief Minister N. Biren Singh also condemned Yunus’s remarks as “provocative and irresponsible,” suggesting they were part of a broader attempt by Bangladesh’s interim government to position the northeast as a “strategic pawn” in geopolitical games. While External Affairs Minister S. Jaishankar emphasised Northeast India’s role as a “connectivity hub” for Southeast Asia and the BIMSTEC, rejecting the landlocked narrative
The BIMSTEC Summit: A Key Test for Diplomacy
The recent 6th BIMSTEC Summit in Bangkok provided a critical platform for New Delhi-Dhaka to address these tensions. On April 4, Modi and Yunus held their first bilateral discussion since Hasina’s fall. Modi adjured Yunus on three key critical areas: the safety and security of Hindu minorities in Bangladesh, amidst reports of violence following the change in Bangladesh government or post-Hasina hostility; refraining from his provocative rhetoric statements, especially those related to Beijing remarks, particularly concerning India’s Northeast.
Yunus acknowledged isolated incidents involving minorities but disputed their magnitude while reiterating Bangladesh’s commitment to maintaining constructive bilateral relations. However, the issue of Sheikh Hasina’s extradition (a key demand from Dhaka) remained unresolved, with India citing legal and diplomatic hurdles as reasons for the delay.
The discussions concluded without any formal agreements being reached. However, it laid the groundwork for a pragmatic baseline. Both leaders pledged continued dialogue. India offered flexibility if Bangladesh addressed its concerns, while Yunus envisioned a mutually beneficial reset.
The Modi-Yunus sideline meeting during the summit addressed the trust deficit following Sheikh Hasina’s exit. It evaluated Yunus’s ability to balance Bangladesh’s foreign policy between India and China. India reiterated its stance on Northeast security and minority rights in Bangladesh.
The dialogue aimed to reassert India’s regional influence, ensuring Bangladesh’s cooperation within the BIMSTEC. However, irreconcilable differences, including transhipment facilities and minority protections, indicate that sustained diplomatic efforts are necessary for the complete normalisation of bilateral relations.
Geopolitical Undercurrents: China’s Expanding Influence
These events unfold against a shifting geopolitical backdrop dominated by China’s growing influence. Beijing’s BRI investments in Bangladesh ($26 billion by 2024, including the Padma Bridge) stand in contrast to India’s $8 billion in loans and grants. Yunus’s Beijing outreach, encompassing appeals for reduced loan rates and industrial relocation, aligns with China’s strategy.
This strategy aspires to encircle northeast India through its neighbours. The prospect of Chinese infrastructure linking Bangladesh to the Seven Sisters amplifies India’s strategic anxieties, particularly due to the Siliguri Corridor’s proximity.
India’s BIMSTEC primacy counterbalances this advancing regional connectivity under its guidance. Nevertheless, Bangladesh walks a strategic tightrope, simultaneously deepening ties with China while managing India’s regional dominance. Such dual-track diplomacy creates complex regional tensions that could devolve into proxy competition in South Asia.
India and Bangladesh face a critical juncture in their relationship, strained by geopolitical tensions and mutual mistrust. To move forward, India should consider a phased restoration of transhipment privileges, linking these to Bangladesh’s commitments to security and minority rights.
By combining economic incentives with strategic clarity India can navigate this fragile and sensitive phase. Besides, joint BIMSTEC projects focused on areas akin to disaster management and infrastructure development offer tangible avenues to rebuild cooperation and trust between the two nations.
For Dhaka, balancing ties with China while maintaining its profound economic dependence on India remains challenging.
A recent import of Indian rice (16,400 tones through Mongla Port in February 2025) underscores this interdependence, even amid tensions. Domestic stability and reduced anti-India rhetoric would strengthen Dhaka’s position in negotiations.
The overarching concerns are clear. India’s port access limitations, Dhaka’s strategic shift to Beijing, and unsettled regional interactions reflect a partnership under pressure. So far their shared history, economic ties, and security interests provide a foundation for reconciliation if both sides prioritise engagement over confrontation. Without diplomatic adjustment, external actors like China could capitalise on this divide undermining a relationship that has long been pivotal to regional security.
The author is a Independent Researcher currently pursuing his Ph.D. from Jamia Millia Islamia University, New Delhi
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