Governance and Policies

India-Bangladesh friendship strengthened in 2016

In 2016, the India-Bangladesh relations made significant strides especially in areas like infrastructure development, connectivity, trade and investment, and power, energy, counter-terrorism, defence and maritime cooperation, writes Rupak Bhattacharjee for South Asia Monitor
Feb 3, 2017

By Rupak Bhattacharjee

In 2016, the India-Bangladesh relations made significant strides especially in areas like infrastructure development, connectivity, trade and investment, and power, energy, counter-terrorism, defence and maritime cooperation. Some of the major developments in the bilateral relations during the year include: export of internet bandwidth from Bangladesh to India through Tripura; supply of power from Tripura to Comilla; supply of diesel from Assam to Bangladesh through Siliguri; Indian Oil Corporation Limited’s (IOCL) proposed liquefied petroleum gas (LPG) terminal in Chittagong; inauguration of integrated check post (ICP) at Petrapole; Bangladesh home minister’s visit to New Delhi and the formation of a joint working group (JWG) to combat terrorism and Indian defence minister’s maiden trip to Bangladesh to boost defence partnership. 

There is a growing realisation in India and Bangladesh that both are partners in progress and development and their destinies are inter-linked with the younger generations seeking high growth rates, greater employment opportunities, poverty alleviation, energy access and speedy economic development. Since Prime Minister Narendra Modi assumed office in May 2014, numerous initiatives have been undertaken to broaden and deepen India’s engagement with the neighbouring countries, including Bangladesh. Greater economic cooperation and connectivity are the salient features of Modi-led National Democratic Alliance (NDA) government’s “Act East” foreign policy. India attaches priority to its ties with eastern neighbour Bangladesh for strategic, security and economic reasons and their friendship strengthened further in 2016.

Infrastructure development

As part of its “Neighbourhood First” policy, the NDA government has been up grading infrastructure in Bangladesh. On March 29, India’s Exim Bank extended a $ 2 billion line of credit (LoC) to Bangladesh for developing infrastructure in the country. This is the biggest credit line that New Delhi has provided to any country. The projects under the LoC cover diverse sectors ranging from information technology (IT), health, education public transport to Indian Economic zones. It is important to note that these projects were selected and decided by Bangladesh according to its development needs and priorities.  

The union government has been engaged in the development of infrastructure along the India-Bangladesh border for smooth movement of goods and people. In a major step towards boosting bilateral trade and border management, prime minsters of India and Bangladesh jointly inaugurated through video conferencing, Asia’s largest ICP at Petrapole in West Bengal on July 21, 2016. This development assumes significance as more than 50% of the India-Bangladesh trade is carried out through this ICP. During the fiscal year (FY) 2015-16, trade worth over Rs 15,000 crore was conducted through this point, which is more than all the land ports and custom stations of India.

The building of infrastructure along the India-Bangladesh border gained momentum in 2016. India is currently up grading Dawki Land Custom Station (LCS) in Meghalaya to facilitate cross-border movement of cargo and passenger. Besides, the recent inauguration of Phulbari-Banglabandha immigration post has opened up new opportunities in Bangladesh’s connectivity with the North Eastern region.

The Awami League (AL) government also seeks to improve Bangladesh’s port facilities with foreign assistance to meet its increasing international trade requirements. In September 2016, Finance Minister AMA Muhith said the Bangladesh government would invite India and China to work together on the development of the country’s southern coast. India, which is presently renovating Bangladesh’s busiest Chittagong port, has evinced interest in building a deep-sea port at Payra. When India’s Foreign Secretary S Jaishankar raised the issue of the Payra port during his talks with Prime Minister Sheikh Hasina on May 11, 2016 in Dhaka, he was told that the proposal could be executed through a consortium.


Trade, investment and people-to-people relations between India and Bangladesh enhanced appreciablyduring 2016 due tothe improvement of cross-border connectivity. There is a sea change from the 1990s and 2000s when Bangladesh’s policy makers, media and foreign policy analysts argued that providing transit facilities to India’s North Eastern states would pose security threat to the country. Dhaka has gradually realised the usefulness of sub-regional connectivity and is keen to make the country a very attractive destination for foreign direct investment (FDI) by up grading physical infrastructure. The Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement (MVA), which is likely to be functional soon and for which trial runs have recently been carried out, will make movement of cargo and passenger faster and cheaper.

The cross-border movement of cargo increased considerably in 2016 clearly reflecting the current bonhomie in the India-Bangladesh ties. When North East especially Assam was reeling under severe flood during the last monsoon season disrupting rail and road networks in the region, Bangladesh allowed transhipment of goods from Ashuganj port to Tripura and Indian trucks from Assam to Tripura through its territory with petroleum products. India’s border state Tripura, which is surrounded by Bangladesh from three sides, has also been playing an active role in consolidating the bilateral ties. Furthermore, sea connectivity between the two nations has been expanded following the signing of the coastal shipping agreement during Modi’s landmark visit to Dhaka in June 2015. The first cargo ship sailed from Chittagong to Vishakhapatnam in March 2016.   

Bilateral trade 

Trade and investment between India and Bangladesh has been growing steadily ever since Hasina assumed office in 2009. Bangladesh is currently the largest trading partner of India among the South Asian Association for Regional Cooperation (SAARC) nations. Bangladesh has emerged as one of the major export market for India in the recent years. The closer ties have helped both the countries to reap the benefits of bilateral and sub-regional trade and investment. According to the India-Bangladesh Chamber of Commerce and Industry (IBCCI), India’s total earnings from trade with Bangladesh, both legal and illegal, and in goods and services as well, may be in the range of $ 14 to 15 billion per year. 

India has provided full access to Bangladesh to its market by extending duty-free facilities on its export products except for a select list of 25 items. Consequently, Bangladesh’s exports to India increased about 30% more in the FY 2015-16 compared to the previous FY. However, India’s exports to Bangladesh declined in the last two years. Reports suggest that it decreased by 4.5% in the FY 2015-16. Another striking feature of the bilateral trade has been Bangladesh’s higher import of raw materials such as cotton yarn and textiles meant for the production of the country’s major export item—readymade garments. Bangladesh prefers to import such products from India as they are cheaper and of finer quality.

Power cooperation

India has been assisting Bangladesh to overcome its chronic power crisis by providing electricity through border states like West Bengal and Tripura. In a major development on March 23, 2016, Prime Minister Modi inaugurated 100-megawatt (MW) power supply from Tripura’s Palatana Power Project to Bangladesh’s Comilla, while his counterpart Hasina provided 10 GB Internet bandwidth to India simultaneously. The supply of additional power will help meet Bangladesh’s rising demand for electricity in its eastern region and on the other hand, the import of bandwidth will help India strengthen telecom services and connectivity in the North Eastern zone.

India is also giving financial and technical assistance to Bangladesh in generating power and the process has been accelerated in 2016. On February 29, Bharat Heavy Electricals Limited (BHEL) signed a deal with Bangladesh India Friendship Company Limited, which is a 50:50 joint venture between India’s state-run National Thermal Power Corporation (NTPC) and Bangladesh Power Development Board (BPDB), to set up a $1.6 billion coal-fired power plant at Rampal in Khulna Division beating Chinese competitors. The 1,320 MW thermal power project is crucial to meet Bangladesh’s growing demand for electricity especially in the southern region.

Energy partnership

The energy collaboration between the two South Asian neighbours received further boost in 2016. On February 6, Bangladesh Prime Minister’s Energy Adviser Tawfique-e-Ellahi met India’s Minister for Petroleum and Natural Gas Dharmendra Pradhan and explored ways for strengthening bilateral cooperation in petroleum exploration and trade. They also discussed the possibility of shipping petrol and diesel to Bangladesh from the newly-built IOCL’s refinery at Paradeep in Odisha. Again on March 18, 2016, the Indian petroleum minister flagged off a goodwill rail rake consignment carrying 2200 metric tone (MT) of high speed diesel from Assam-based Numaligarh Refinery limited’s (NRL) terminal in Siliguri.      

Similarly, India in its bids to save time and cost of transporting liquefied natural gas (LNG) and LPG to the North Eastern states, is trying to build facilities along Bangladesh coast. In April 2016, state-run Bangladesh Petroleum Corporation (BPC) and IOCL signed an agreement to jointly set up a LPG terminal in Chittagong. Efforts are also on to resume negotiation of the 900 km-long Myanmar-Bangladesh-India gas pipeline project. India is presently engaged in the expansion of Bangladesh’s Eastern Refineries in Chittagong.

Border management  

India and Bangladesh share 4,096 km border, which is the third largest land border between the two countries in the world, and managing the same has been a challenging task for both the nations. New Delhi and Dhaka have intensified cooperation in the recent months to curb criminal activities and movement of terrorists across the borders. To strengthen coordination in border management and combat smuggling, India’s Border Security Force (BSF) and the neighbouring country’s Border Guard Bangladesh (BGB) held the First India-Bangladesh Joint Guarding Exercise on March 31 in the Sunderbans—a crime-prone area. The BSF and BGB carried out joint searches of cargo vessels on the Ichchamati river. 

The border guarding forces of the two countries said the joint exercise would be extended on land as well to make it a part of coordinated border management plan. As a result of intensified patrolling by both BSF and BGB along the international border, the smuggling of cattle has come down by nearly 60% to 70% in 2016. Both the sides are also making efforts to stop smuggling of fake Indian currency notes (FICN), small arms and contraband items across the border.  

Counter-terrorism cooperation

The strengthening of the counter-terrorism cooperation between New Delhi and Dhaka was the highlight of their bilateral ties in 2016. Terrorism and violent religious extremism pose direct threat to peace, security and stability in the region and India extended full support to the AL government’s policy of zero-tolerance towards terrorism as it practices the same policy. Both the governments know fully well that the very objective of the terrorist groups is to undermine the close ties between the two neighbouring nations and have been coordinating with each other to thwart the nefarious designs of the inimical forces.

The Bangladesh government sought New Delhi’s cooperation in its fight against terrorism after the country’s worst terror attack at a Gulshan café on July 1, 2016. Immediately after the bizarre incident, Prime Minister Modi clearly said that India would be fighting beside Bangladesh against terrorism as it did in 1971. Bangladesh Home Minister Asaduzzaman Khan paid a two-day visit to New Delhi on July 27-28 and discussed ways to expand counter-terrorism and security cooperation between the two countries with his Indian counterpart Rajnath Singh.

Following the Bangladesh home minister’s visit, both the governments decided to create a joint working group (JWG) to facilitate flow of information on a real-time basis. The major objective behind the creation of a bilateral mechanism is to curb cross-border movement of the terrorists. India and Bangladesh duly recognised that smooth exchange of information regarding the movement of the terrorists is essential to pre-empt and prevent terror attacks in both the countries. 

In their attempts to broaden the counter-terrorism cooperation, India and Bangladesh also underscored the need to combat the propaganda being spread by the terrorist outfits. The formation of a 12-member working group comprising members from both the countries during Bangladesh Information and Broadcasting Minister Hasanul Haq Inu’s three-day visit to New Delhi in August 2016 is a step in that direction. Inu signed a memorandum of understanding (MoU) with his Indian counterpart Venkiah Naidu in this regard.

In the wake of the July 1 terror attack, the role of jihadi propaganda especially the influence of controversial tele-evangelist Zakir Naik on one Gulshan attacker became a key concern for both the countries. New Delhi and Dhaka felt the necessity of greater intelligence sharing and cooperation between their investigation agencies to combat juhadi propaganda and radicalisation of youth. The hostage crisis at the Gulshan eatery was an unprecedented development in Bangladesh’s fight against terrorism and had shook the conscience of the country’s civil society.

In the face of repeated terror attacks in the neighbouring country, New Delhi also renewed its offer to Dhaka for a comprehensive agreement to enhance bilateral counter-terrorism cooperation, including sharing of intelligence inputs and training of Bangladesh’s security personnel in India. The growing linkages between the Islamic State (IS) and the Bangladeshi groups especially Neo Jamaat-ul-Mujahideen Bangladesh or “Neo-JMB”, which orchestrated the Gulshan attack, had been a serious concern for India. Soon after the attack, the Indian intelligence agencies feared that the IS could launch terror attacks in India from its bases in Bangladesh.


Defence collaboration                   

In efforts to counter Beijing’s influence over Bangladesh’s defence establishment and revitalise New Delhi’s defence relationship with Dhaka, India’s Defence Minister Manohar Parrikar undertook a two-day trip to Bangladesh from November 30 to December 1, 2016. Parrikar was the first Indian defence minister to visit Bangladesh with which India’s defence ties are currently limited to some training and military-to-military cooperation. He held talks with senior defence officials, Prime Minister Hasina, who also holds the defence portfolio in the government, and her security adviser on wide range of issues, including terrorism, security personnel training, joint exercises, humanitarian assistance and disaster relief and development of blue economy.India also seeks to expand cooperation in the naval area and during Parrikar’s visit, expressed its willingness to conclude a white hipping agreement with Bangladesh to exchange information on the identity and movement of commercial non-military merchant vessels. Earlier, the seventh edition of India-Bangladesh joint military exercise SAMPRITI-2016 was held in the neighbouring country from November 5 to 18 for practicising counter-terrorism and disaster-management operations.

Maritime cooperation

The peaceful settlement of the maritime boundary disputes between India and Bangladesh has opened up opportunities for cooperation in many areas, including marine biotechnology, eco tourism, deep sea fishing and disaster management. A four-member delegation led by Director General of Bangladesh Coast Guard Rear Admiral Aurangzeb Choudhury paid a three-day visit to India in early December 2016 and discussed the possibilities of strengthening maritime cooperation with his Indian counterpart. The two sides held talks on various issues, including maritime law enforcement, search and rescue, and marine pollution response. The delegation’s visit comes just on the heels of Indian defence minister’s trip to Bangladesh.


Cultural ties

India and Bangladesh share common history, linguistic and familial links and people-to-people contacts play a crucial role in cementing their friendship. The bilateral cultural ties received new impetus in August 2016 when President Pranab Mukherjee launched Akashvani Maitree Channel and its multimedia website in Bengali language for listeners in West Bengal, Bangladesh and adjoining areas. Akashvani’s transmission from Kolkata played an instrumental role in the liberation of Bangladesh in 1971.  

Political relations

One of the most important aspects of the multifaceted India-Bangladesh relations has been the growing understanding between the political leaders of the two countries and the process consolidated further in 2016. The New Delhi-Dhaka ties have scaled new heights over the last few years and the leaders of both the nations repeatedly stressed this point during their bilateral talks in 2016. In September, Bangladesh Finance Minister AMA Muhith noted that the bilateral relations between the two nations are at “its best now”.   

The political relations between the two countries have become stronger after Modi’s successful visit to Dhaka in 2015. The Indian political leaders and diplomats appreciated the counter-terrorism measures initiated by the Hasina government in the aftermath of the Gulshan attack. It is unfortunate that Prime Minister Hasina’s scheduled visit to New Delhi on December 16 was cancelled. The focus of the visit was strengthening of defence and maritime cooperation.

Bangladesh wholeheartedly supported India in its efforts to diplomatically isolate Pakistan by boycotting the 2016 SAARC Summit scheduled to be held in Islamabad in the wake of the Uri terror attack and also endorsed the “surgical strike” that the Indian Army carried out across the border to avenge the killing of its 19 soldiers. The Hasina government also seeks balance of strategic ties and categorically stated that Chinese President Xi Jinping’s visit to Dhaka in October 2016 would not have any impact on its relations with other countries, including India.

Challenges and prospects

During the last one year, the India-Bangladesh relationship expanded remarkably incorporating newer areas of cooperation. However, some bilateral problems like rising trade imbalance, persistence of trade barriers, occasional killing of Bangladeshi nationals by India’s BSF, cross-border movement of militants and the Teesta water sharing issue are yet to be resolved.

Despite initiating trade facilitation measures by both the sides, the bilateral trade gap has widened over the years and it needs to be bridged without further delay. Dhaka’s business and industry leaders also lament that although India allowed duty-free access of most Bangladeshi items, there still exist some provincial and other development duty on export of their products to India. Currently, Bangladesh’s exporters have to pay 12.5% countervailing duty to enter Indian markets.


The killing of Bangladeshi nationals by India’s BSF is one more irritant in the New Delhi-Dhaka relations. Even after taking necessary steps by both the sides to secure the border, the number of Bangladeshis  being killed in the frontier region by the BSF has not come down to zero-level. The cross-border movement of criminals and terrorists is also a matter of concern for both the governments. Taking advantage of difficult terrain and porous frontiers especially along Meghalaya and West Bengal, the militants and criminals continue to operate at their will.  Besides, Dhaka has pointed out the serious problems of trafficking in small arms and drugs through the Indian border into Bangladesh.


Moreover, there is a need to resume bilateral negotiation on the vexed Teesta issue involving the Mamata Banerjee government of West Bengal. Bangladesh seeks an early settlement of the Teesta question as the country’s northern part has been facing a drought-like situation. The AL government wants an equitable distribution of common river waters between Bangladesh and India. Therefore, it is imperative that both the sides initiate steps towards effective management of trans-border rivers which would serve an amicable and permanent solution.


The growing bonhomie in the New Delhi-Dhaka ties has generated considerable interests among the policy makers, diplomats, media, academics and business leders in both the countries, particularly in Bangladesh. While participating in a conference on the New Delhi-Dhaka ties in September 2016, eminent Bangladeshi economist Professor Rehman Sobhan called for a multiparty and multi-stake holder’s dialogue between India and Bangladesh for continuation of the process even in the case of change of government in both the countries.


The full potential of the economic cooperation between India and Bangladesh is yet to be realised despite the steady growth in the bilateral trade and investment. Bangladesh Prime Minister’s Economic Affairs Adviser Mashiur Rahman has recently suggested greater bilateral cooperation in three-sectors—education, health and trade. He has also urged the political leaders of the two nations to expand tradable items at the four border haats between India and Bangladesh so that more people could benefit from the trade.


There is also scope for developing riverine navigation between the two countries as it provides the cheapest mode of transport. During the bilateral talks held in 2016, Bangladesh stressed on creation of a Ganga-Brahmaputra-Meghna Interstate Water Authority on the lines of the BBIN MVA among SAARC countries. It remains to be seen how the leaders of both the nations address the pressing issues and take forward the bilateral ties to a higher level in the coming year.

(Dr. Rupak Bhattacharjee is an independent analyst on India’s northeast and Southeast Asia. Feedback at 

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