Bangladesh cancels $21m defence deal with India
Bangladesh has officially terminated a $21 million defence agreement with India’s state-owned Garden Reach Shipbuilders and Engineers Ltd (GRSE), which was tasked with building an advanced ocean-going tugboat for the Bangladesh Navy, according to a report by the Hindustan Times.
This contract marked the first major deal under the $500 million line of credit extended by India for defence procurement, signed in July 2024—shortly before former Prime Minister Sheikh Hasina left office.
Bilateral relations between Dhaka and New Delhi have become increasingly strained in recent months. India has imposed restrictions on the import of Bangladeshi ready-made garments, confining them to select ports—a move that affects exports valued at around $700 million annually.
Adding to the tension, India earlier this month prohibited the entry of Bangladeshi consumer goods through 11 land border posts in its northeastern region. In April, New Delhi also discontinued a key transit facility that enabled Bangladeshi goods to reach third countries via Indian seaports and airports. In retaliation, Bangladesh suspended the import of yarn from India through land routes on April 13.
Despite the ongoing tensions, economic ties between the two countries have been significant. In the 2023–24 fiscal year, Bangladesh was India’s top trading partner in South Asia. India stood as Bangladesh’s second-largest export destination, absorbing 12% of its total exports. During the same period, India exported goods worth $11.06 billion to Bangladesh, while importing $1.8 billion in return.
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