India - Bangladesh Relations

Historical Background (1971–1975):

  • 1971 Liberation War: India played a decisive role in Bangladesh’s independence from Pakistan, creating a deep sense of gratitude and camaraderie in Bangladesh.
  • 1972 Indo-Bangla Treaty of Friendship: Signed by Indira Gandhi and Sheikh Mujibur Rahman, this cemented early diplomatic ties.
  • 1975: The assassination of Mujibur Rahman caused political instability. Subsequent military regimes leaned towards Pakistan and China, straining ties with India.

Transition Period (1990s): Democratic Revival and Warming Ties

  • Return of democracy in Bangladesh helped restore relations.
  • 1996: The Awami League under Sheikh Hasina came to power.
  • Ganga Water Sharing Treaty (1996): A milestone agreement resolving long-pending water-sharing issues over the Ganges River, marking renewed cooperation.

Mixed Era (2000s):

  • Major issues:
    • Cross-border insurgency
    • Trade imbalances
    • Border management problems
  • Despite tensions, economic and infrastructural cooperation grew.
  • India supported energy and transport projects in Bangladesh.

Landmark Progress (2010s): Strong Diplomatic Gains

  • 2015 Land Boundary Agreement (LBA): Historic resolution of border disputes by exchanging enclaves, enhancing local connectivity and reducing border tensions.
  • Deepening of economic engagement, including:
    • Lines of credit for infrastructure
    • Cross-border electricity trade
    • Increased trade in textiles and agriculture

Current Trends (2020s): Cooperation with Caution

  • Ongoing Initiatives:
    • CEPA (Comprehensive Economic Partnership Agreement) negotiations
    • Infrastructure connectivity projects like Akhaura-Agartala rail link
  • Challenges:
    • Domestic political turmoil in Bangladesh, especially Sheikh Hasina’s 2024 exile
    • Accusations of Indian interference in Bangladesh's internal politics
India - Bangladesh Relations

Trade Relations: Backbone of Bilateral Ties

  • Trade Volume (2022–23): $15.9 billion
    • India exports: $13.7B
    • Bangladesh exports: $2.2B (mainly RMG, jute, fish, leather)
  • Imbalance: Trade heavily favors India; Bangladesh seeks corrective steps.
  • Raw Material Dependency: Bangladesh’s RMG sector depends on Indian cotton and yarn.
  • Border Trade: 4,096 km shared border aids land trade via ports like Petrapole–Benapole.

Connectivity & Tariff Preferences

  • Projects: BBIN Motor Vehicle Agreement, rail/river route revivals
  • Bangladesh enjoys duty-free, quota-free access under SAFTA
  • Indian Lines of Credit support trade infrastructure: ports, roads, power lines

Challenges and Concerns

  • Non-tariff barriers, red tape at land ports, and protectionist policies in Bangladesh (e.g., import restrictions on yarn)
  • Trade deficit pressures Bangladesh to demand better market access
  • Balancing open trade vs protecting local industries remains a key policy tension

Geopolitical Relevance

  • Bangladesh's LDC graduation by 2026 makes Indo-Bangla trade ties crucial for sustainable economic growth
  • Strategic for India’s Act East Policy and regional connectivity initiatives

What is LDC?

  • LDC Graduation refers to a country's transition out of the "Least Developed Country" (LDC) category as defined by the United Nations.
  • LDCs are countries that face severe structural impediments to sustainable development, and they are identified based on three main criteria:
    1. Income Level (Gross National Income per capita)
    2. Human Assets (health, education, nutrition indicators)
    3. Economic & Environmental Vulnerability (exposure to shocks)

    • There are currently 45 countries in the LDC category (as of early 2025), mostly from Africa and Asia.

    What is LDC Graduation?

    • LDC graduation means a country has met specific thresholds in two of the three above criteria in two successive triennial reviews by the UN Committee for Development Policy (CDP).
    • In simple terms, the country is no longer considered to be in the "least developed" category, and it "graduates" to developing country status.

A Relationship in Transition

  • India-Bangladesh relations have evolved from liberation-era friendship to a complex interplay of economic interdependence and political sensitivity.
  • Sustained dialogue, mutual respect, and careful diplomacy are key to future cooperation.