Mutual benefits

Sheikh Hasina's visit reflected geopolitical convergence

Bangladesh Prime Minister Sheikh Hasina’s visit to India just a fortnight after she attended the third inauguration of Narendra Modi’s prime ministership underlined the mutuality of geopolitical interests between the two neighbours that enjoy deep historical links and cordial relations despite blips over a Teesta river water-sharing agreement and the issue of illegal immigration. Ms Hasina is the first foreign leader to visit India after the formation of the new government in New Delhi. Recently sworn in for a historic fifth term as Prime Minister, Ms Hasina is seeking to rebalance Bangladesh’s asymmetric relations with China, and the latest two-day visit to New Delhi served to emphasise that recalibration. On India’s part, Mr Modi has been seeking to mobilise South Asian allies with a “neighbourhood-first” approach to position itself as a regional power and credible counter-balance to China.

The broad thrust of the 10 agreements between the two countries reflected these overlapping objectives. They included a raft of agreements on defence, maritime security, the blue (or ocean) economy, space, telecommunications, green technologies, medicines, and bolstered ties in railway connectivity. These agreements represent a continuum with key initiatives between the two governments in 2023. Chief among them was the India-Bangladesh Friendship pipeline, to transport high-speed diesel from the Numaligarh Refinery, Assam, to northern Bangladesh. Under a proposed trilateral hydropower agreement, India also agreed to facilitate electricity exports through Bhutan to Bangladesh. The latter initially plans to import around 1,500 Mw from Bhutan, and there has been progress on this project in recent months. At the same time, India has sought to manage the problems over Teesta water-sharing, after an agreement has long been stalled by objections from Sikkim and West Bengal, by sending a technical team to advise Dhaka on a mega project to conserve and manage the Teesta river. This offer comes on the heels of discussions last month between China and Bangladesh to construct a $1 billion development project in the Teesta basin. Besides, technical-level negotiations on renewing the Ganges Water Treaty of 1996 will start. Ms Hasina also addressed the Confederation of Indian Industry (CII), inviting Indian businesses to invest in Bangladesh and promising investment in better infrastructure to improve logistics between the two countries.

But for all the declarations of friendship and ceremonial protocols in New Delhi, China remains the looming challenge for both countries. China dwarfs India in terms of trade with Bangladesh. It is Bangladesh’s single-largest partner with bilateral trade worth $24 billion. It is also the major source of raw materials for the engine of Bangladesh’s economic growth — textiles and leather exports. Though Bangladesh is India’s largest trade partner in South Asia, bilateral trade between the two is just $14 billion. The point of friction between Beijing and Dhaka lies in projects under China’s signature Belt and Road Initiative (BRI) in Bangladesh. Although China has completed some 35 major infrastructure projects in Bangladesh under the BRI, financing has emerged as a key point of concern. Dhaka now owes Beijing $4 billion or 6 per cent of its foreign debt for BRI projects, a predicament that has delayed the creation of a 5G network and some key highways. In contrast, India has extended three lines of credit as well as grant assistance to Bangladesh for infrastructure development in addition to community development and capacity-building projects. Handled well, this relatively benign approach could prove another solid building block for India-Bangladesh relations.