Bangladesh cancels ₹180 crore defence deal with India amid rising tensions

Bangladesh cancels ₹180.25 crore defence deal with Indian PSU GRSE amid escalating diplomatic tensions and trade curbs between the two neighbouring nations

Diplomatic relations between India and Bangladesh have taken a sharp downturn as Bangladesh has scrapped a major defence contract worth ₹180.25 crore with Kolkata-based public sector unit, Garden Reach Shipbuilders & Engineers Ltd (GRSE).

 

The cancellation, confirmed in a stock exchange filing by GRSE on Wednesday, deals a significant blow to India's defence exports. GRSE, which functions under India’s Ministry of Defence (MoD), announced, “We wish to inform you that the Government of the People’s Republic of Bangladesh has cancelled the order.”

 

The terminated agreement involved the construction of an advanced ocean-going tug—a high-value vessel designed for deep-sea towing and salvage missions—intended for the Bangladesh Navy.

 

 

While Dhaka has not provided an official reason, the move is widely perceived as a retaliatory gesture following India's recent policy shift on regional trade. On May 18, India imposed strict restrictions on imports of Bangladeshi goods, including ready-made garments and processed foods, particularly blocking them at Integrated Check Posts (ICPs) in the Northeast. This mirrored trade curbs Bangladesh had introduced earlier this year. 

 

Tensions began escalating after controversial remarks by Bangladesh’s interim government Chief Advisor, Muhammad Yunus, during his recent visit to China. Yunus referred to India’s Northeast as “landlocked” and described Dhaka as the “only guardian” of maritime access in the region—comments that sparked sharp reactions in New Delhi.

 

Further deepening the strain, Yunus, in a meeting with the Deputy Speaker of Nepal’s House of Representatives, advocated for a joint economic strategy among India’s northeastern states, Nepal, Bhutan, and Bangladesh.

 

“We have more to gain together than apart,” he said, highlighting cooperation in hydropower, healthcare, and connectivity as key areas of mutual benefit.