When Indian Prime Minister Narendra Modi met Bangladesh’s interim leader Muhammad Yunus at the sidelines of the BIMSTEC summit in April — their first official meeting since Sheikh Hasina’s government collapsed in August 2024 — hopes rose for a breakthrough in strained bilateral ties. However, relations have since hit a new low, especially with Dhaka abruptly canceling a $21 million contract for an advanced ocean-going tug with an Indian state-run shipbuilding firm, Garden Reach Shipbuilders and Engineers Ltd (GRSE), reportedly without any explanation.
Dhaka’s move comes at a time when India and Bangladesh have been implementing reciprocal trade restrictions, since New Delhi withdrew its transshipment facility for Bangladesh three days after the Bangkok meeting. More recently, as part of the tit-for-tat measures, New Delhi announced its decision to impose restrictions on the export of readymade garments and other specified commodities from Bangladesh via land ports. Roughly a month earlier, Dhaka had banned yarn and rice imports from India through the same land routes.
Bangladesh is the world’s 26th largest arms buyer. Several countries, including India, have been eyeing the Bangladesh defense market, as Dhaka procures almost all its medium-sized and heavy war equipment from foreign countries. Much to New Delhi’s discomfort, China has long been a dominant player in this space, with Beijing accounting for 82 percent of the total arms imported by Bangladesh between 2009-2013.
Under the Hasina government, some progress was seen in defense ties with India, notably the signing of an MoU on the framework for defense cooperation in 2017. New Delhi also reassured Dhaka of support for the modernization and capacity-building of the Bangladesh armed forces as part of its Forces Goal 2030 program. Bangladesh’s former Foreign Minister Hasan Mahmud had indicated that Dhaka was keen to continue purchasing defense equipment from India. According to Indian reports, citing unnamed official sources, Bangladesh had even shared a “wish list” of military platforms and systems that its armed forces wanted to procure from India.
The defense contract with GRSE, signed in July 2024, before Hasina’s ouster, was the first major contract under the $500 million line of credit New Delhi provided for Dhaka’s defense-related procurements.
Yunus has shown no interest in any form of defense or security partnership with New Delhi and is actively disbanding Hasina’s security cooperation with India. To fill the vacuum, Beijing is moving swiftly to strengthen its existing defense diplomacy with Dhaka. According to some reports, Dhaka is already in talks with Beijing to procure an initial batch of 16 J-10C aircraft. According to Indian intelligence sources, under Yunus, Dhaka also substantially increased its ammunition imports from Pakistan, to 40,000 rounds of ammunition in 2024 from 12,000 rounds in 2023.
It is worth noting that under Hasina, Dhaka did strengthen ties, including military cooperation, with Beijing, but ensured that such cooperation did not irk New Delhi. This was achieved by maintaining cautious ambiguity and walking a tough tightrope, balancing the competing interests of Delhi and Beijing, in line with the core principle of Bangladesh’s “friendship to all and malice to none” foreign policy that was established by Hasina’s father and independent Bangladesh’s first Prime Minister Sheikh Mujibur Rahman.
Marking a stark departure, Yunus has displayed no qualms in exhibiting his pro-China sentiments, even suggesting that Bangladesh, as the “only guardian of the ocean” for India’s landlocked northeastern states could serve as “an extension of the Chinese economy.” Such remarks, coupled with openly anti-India rhetoric, make it clear that under the interim government’s leadership, Dhaka is no longer interested in walking a diplomatic tightrope.
For decades, India and China have both been eyeing the Teesta River management project due to the river’s strategic significance. While Hasina eased India’s security concerns by prioritizing New Delhi over Beijing in implementing the project, Yunus’ recent move to allow Chinese involvement signals a sharp policy shift and an undeniable pivot toward China.
Under the interim government, Dhaka was expected to recalibrate its bilateral relationships to match new domestic and external realities, especially given the strong anti-India public sentiments. New Delhi’s perceived inaction on Dhaka’s repeated requests to extradite Hasina further fuels such sentiments. Meanwhile, Bangladesh’s overt diplomatic shift toward Beijing, showing no regard for New Delhi’s security concerns, indicates an overhaul of the fundamental tenets of Dhaka’s foreign policy.
Dhaka-Delhi ties, which were once built on the foundation of mutual trust and respect, has now been replaced by mutual suspicion, effectively shrinking the space for bilateral diplomacy. Nevertheless, the interim government in Bangladesh must evaluate if it can afford to isolate or create diplomatic friction with India — a country with which it shares its longest international border — at a time when its domestic legitimacy rests on shaky ground. Meanwhile, New Delhi needs to rebuild trust with the Bangladeshi people to prevent derailing the historically cultivated people-to-people ties, while maintaining a working relationship with the interim government.
