India-Bangladesh relations - Challenges and Opportunities

Published October 23, 2024 | This is a working paper presented at the Takshashila Institution Internal Conference on ‘India’s Neighbourhood’, September 2024

Authors

Executive Summary

India-Bangladesh relationship is complex with historical, cultural, economic, national security and geopolitical aspects. This paper examines this relationship  through the lens of a tri-axis framework, i.e., state-to-state relations, state-to-people relations, and people-to-people relations, to further a comprehensive understanding of the challenges and opportunities in this engagement.

It finds that there were significant strides made in bilateral relations during Sheikh Hasina’s tenure in areas of economic cooperation, security and infrastructure development and regional connectivity. However, India’s inability to engage with a wider spectrum of political and social actors within Bangladesh did hurt the relationship, and could, in the process, hurt India’s regional and global power aspirations.

A very interesting finding of this paper is the dichotomy between strong state-to-state ties and more tenuous state-to-people and people-to-people relations. It could even be argued that the strong state-to-state ties were also inherently tenuous, as is becoming evident now amidst the current turmoil in Bangladesh, because they were predicated on ties with a section of the political spectrum and weren’t broad-based as such. Addressing these gaps, which have been influenced by historical grievances, domestic politics and perceived asymmetries in the bilateral relationship, will help build and strengthen a sustainable, strategic partnership.

To this end, this paper offers a set of recommendations for Indian policymakers. These include diversifying political and social engagement in Bangladesh, accelerating the process of deepening economic bonds and identifying newer avenues to do so, enhancing security cooperation, recognising and enhancing sub-national diplomacy within India perhaps even through formal mechanisms, facilitating sustained cultural, educational and other people-to-people exchanges, and promoting media engagement.

Such a multi-dimensional, inclusive, partnership-based approach to India-Bangladesh relations, which recognises and builds on the shared historical and cultural affinities between both the nations, will help navigate this complex relationship in the short term, as well as shepherd it over the long term.

Historical Background

The legacy of colonialism, deep religious and ethnic linkages and divides, porous borders and tensions over resource-sharing weigh heavily on relations between states across the Indian subcontinent. Owing to this, domestic politics within India and Bangladesh have a strong bearing on their engagement with each other. In a very vivid sense, in the India-Bangladesh dyad foreign policy is a direct extension of domestic politics. 

The modern state of Bangladesh came into existence in 1971 amid a unique set of circumstances. The use of force by the regime in West Pakistan to suppress a popular Bengali nationalist movement in East Pakistan resulted in a massive influx of refugees to India. After nearly 10 months of brutal violence by the West Pakistani forces, the Indian state eventually intervened militarily in early December, following a pre-emptive attack by the Pakistani air force. The brief conflict that ensued resulted in the creation of Bangladesh, as a secular state under a new constitution.

This tumultuous formative process had a profound impact on state-to-state relations between India and Bangladesh. The early state-to-state bonhomie between India and Bangladesh under Indira Gandhi and Sheikh Mujibur Rahman didn't last long. Mujib, who led the country after its first elections in 1973, had himself sought to re-balance ties with Pakistan. The Awami League government revoked bans against pro-Pakistan organisations in Bangladesh and in 1974, Mujib attended an OIC summit in Lahore. These steps paved the way for Pakistan to recognise Bangladesh. Mujib’s assassination in 1975 not only brought new political forces to power but also sharpened the trend of diversification in Bangladesh’s foreign policy.

Through the late 1970s, under the leadership of General Ziaur Rahman, who founded the Bangladesh Nationalist Party (BNP), economic ties with India remained modest, while border security challenges persisted. The assassination of General Ziaur Rahman in 1981 brought fresh turmoil and military rule. Under General Hussain Muhammad Ershad, Bangladesh-India relations did not progress substantively, despite the formation of SAARC. Popularly known as “the dictator”, under pressure from protests by opposition alliances led by the Awami League (AL) and BNP, Ershad sought democratic legitimacy by establishing the Jatiya Party and holding parliamentary and presidential elections in 1986. Subsequently, in 1988, he enacted a constitutional amendment declaring Islam as the state religion. This has since been a persistent faultline within Bangladeshi politics, as evident from the fact that even today Bangladesh appears to be a secular country but also seems to have state religion.

Ershad’s new government did not last its full tenure, falling after popular protests in late 1990. The subsequent democratic transition in Bangladesh saw the BNP led by Khaleda Zia, wife of Ziaur Rahman, and the Awami League led by Sheikh Hasina, daughter of Sheikh Mujibur Rahman, dominating national politics, each pulling together smaller alliance partners. The trend of alternating electoral victories for each of them snapped after the 2008 election. Since then, Hasina retained power through August 2024, when she was deposed following another popular uprising and fled to India.

Current State of Affairs

The recent political developments in Bangladesh threaten its social, political and economic stability. This is a cause of concern for India because a stable and economically thriving Bangladesh has proved to be its strongest ally in the immediate neighbourhood. Moreover, the strong anti-India sentiment within some sections of the society and the political class have further put a strain on India-Bangladesh relations. This hurts India’s economic, security and geopolitical interests.

Over the last 15 years, under the AL government, there were significant achievements on the economic and security front. The government’s pluralistic outlook helped strengthen the relationship with India. Bangladesh is India’s biggest trade partner in the subcontinent, and India is Bangladesh’s second biggest trade partner in Asia. Total bilateral trade in FY 2023-24 stood at $14.01 billion, with India importing $1.97 billion worth of goods from Bangladesh. Bangladesh is also India’s 4th top export destination globally. However, the current ferment in the country could hurt Indian exporters, with the shortage of foreign exchange already affecting exports. Last year, Bangladesh had also become the 19th country to sign a rupee trade settlement deal with India. India and Bangladesh had also recently agreed to start negotiations on the Comprehensive Economic Partnership Agreement soon, and operationalise two Special Economic Zones (SEZs) in Mongla and Mirsharai. The two countries have also signed MoUs in 2023 to ease cross-border payment transactions.

Tourism and medical treatment are the biggest reasons attracting Bangladeshis to India. The demand for Indian medical visas is the highest, through a highly liberalised process that has been extended uniquely to Bangladesh. India is the top destination for Bangladeshi citizens.

The power and energy sector has been another significant domain of cooperation. The Maitree Super Thermal Power Plant has been supplying electricity to the Bangladesh grid. The India-Bangladesh Friendship Pipeline between the two countries for transporting diesel, and offshore oil exploration have been some other avenues of economic cooperation. India provides 11650 MW of electricity to Bangladesh. The Liquefied Petroleum Gas (LPG) terminal set up in Chittagong in 2016 helps not only Bangladesh but also India’s northeastern states.

India has also extended Lines of Credit (LOC) to Bangladesh worth around $8 billion for development of infrastructure. The 6th cross-border rail link between Agartala in India and Akhaura in Bangladesh was inaugurated on 1st November 2023. The Haldibari (India) - Chilahati (Bangladesh) renovated rail link was operationalised in 2021. Road and inland water connectivity has also seen considerable activity. India has also operationalized the agreement for the usage of Chittagong and Mongla Ports in 2023. All of this is important from trade perspective as also for improving connectivity with India’s north east, reducing dependence on the long, narrow, congested Siliguri Corridor.

India is also building, with Japan’s assistance, the Matarbari deep sea port of Bangladesh. This project could help in countering Chinese influence in this region. Bangladesh recently purchased two Chinese submarines and two frigates. Bangladesh’s biggest arm supplier is China. It has also invested over $7 billion in Bangladesh, and its exports to China in 2023 were over $22 billion. China has evinced interest in the Teesta river conservation project. China, the second largest provider of foreign aid for Bangladesh, has shown a lot of interest in developing the southern part of Bangladesh in terms of infrastructure, disaster and climate change resilience, and economic development of the southern deltaic region. It is, therefore, imperative from a geopolitical perspective for India to preserve and deepen its relationship with Bangladesh. To this end, the memorandum signed by Russia, India and Bangladesh for Bangladesh’s first nuclear power reactor can also be seen from that perspective.

During Hasina’s tenure, India and Bangladesh were able to successfully resolve our long-pending issues related to the boundary and territorial waters. However, an agreement on the Teesta river still remains challenging.

A stable Bangladesh is also important for India’s security, given the porous nature of the land border. A supportive government in Dhaka under Hasina was critical in cracking down on insurgent and terror outfits, while building common cause on the vexed issue of illegal immigration. As per some estimates, illegal immigration from Bangladesh to India could have exceeded 15 million. This has been a cause for social friction in the bordering north-eastern states of India.

India’s Interests

As the largest country in the Indian subcontinent, it is in India’s interest to have a peaceful, progressive neighbourhood and, therefore, to maintain a good, productive relationship with its neighbouring countries.

India has economic, security and geopolitical interests when it comes to Bangladesh.

Enhancing their mutual, symbiotic trade relationship will help both countries, particularly in sectors like the garment industry where Bangladesh imports a lot of raw material from India. Regional cooperation and connectivity will be mutually beneficial. Resolving water-sharing agreements is also important in that context. India can capitalise on Bangladesh’s growth trajectory and its goal to become a developed country by 2041. India will do well to increase FDI into Bangladesh, which is currently low (only ~$16 million out of $3.5 billion total FDI in 2022), and use the planned SEZs as gateways for Indian businesses.

A tight relationship with Bangladesh helps keep in check China’s influence over Bangladesh and could help keep it away from the Bay of Bengal, which is important from a geopolitical perspective because of trade routes, military reasons and abundant hydrocarbon resources. A deep engagement with Bangladesh therefore, is important for India geopolitically, and aligns neatly with India’s "Neighbourhood First” policy, "Act East” policy, SAGAR doctrine and the Indo-Pacific vision. It helps India’s regional and global power ambitions. India should engage with Bangladesh as a nation, beyond just the ruling party, ensuring a long-term strategic partnership.

Counter-terrorism cooperation, border management, maritime security and intelligence sharing are areas of mutual interest from the national security perspective. It is imperative to remember that internal instability and religious friction in Bangladesh can have spillover effects for India.

India should leverage cultural affinities with Bangladesh to strengthen bilateral ties and improve people-to-people engagements, and thereby boost India’s image there.

A rules-based relationship, instead of just a politically convenient one, will be in both the nations’ interest.

Framework Application

In this section, we examine India-Bangladesh through the lens of a tri-axis framework, i.e., state-to-state relations, state-to-people relations, and people-to-people relations. The graphic below illustrates the different aspects of this framework. 

1. State-to-State Relations: 

It is evident from the above discussion that India-Bangladesh state-to-state relations thrived during Sheikh Hasina’s tenure. This was the case despite the changes in the ruling dispensation in India. Over the course of Hasina’s terms, intense and continuous high-level dialogue took place between the two sides. India was a priority partner for Bangladesh in its foreign policy. Meanwhile, New Delhi was supportive of a broader global role for Dhaka. For instance, Bangladesh was a guest country invited to attend the various discussions during India’s G20 Presidency in 2023. In addition, there was a significant spike in development cooperation projects. In fact, Bangladesh emerged as India’s largest development partner, with numerous high-impact projects. Over the past decade, India extended three Lines of Credits amounting to around $8 billion to Bangladesh for development of infrastructure. In addition, both sides were not only able to sign a landmark Land Boundary Agreement but also engaged in a deeper dialogue on security, particularly in terms of cracking down on anti-India insurgent groups, along the 4,096-km-long border.

However, the fundamental limitation of this approach has been India’s inability to engage a broader spectrum of political actors within Bangladesh. This has become apparent after the events of August 2024. Following Hasina’s ouster, there were many who criticised New Delhi for its sustained backing of the AL government despite its growing authoritarian tendencies and crackdown against opposition parties. While there is some merit to this argument, there is a case to be made that such criticism ignores the peculiarities of the political history of India-Bangladesh ties and India’s experience of engaging with earlier BNP governments. In other words, did New Delhi believe that there were willing partners across the aisle in Dhaka that it could engage with? Evidently, the answer was no. However, given recent developments, India now finds itself in a position that it will likely have to engage with the BNP and its partners following the tenure of the current caretaker government. Alternatively, there are other political forces that could emerge from the churn of the student protests. Going forward, it might be useful for New Delhi to not only deal with those in power in Dhaka but also maintain links with a spectrum of stakeholders, however tenuous those might be. 

Another challenge for New Delhi has been the management of sub-national stakeholders within India. Political friction between the Union Government and governments of states that border Bangladesh have inhibited certain outcomes. The discussions on the Teesta river treaty and the potential challenges facing the renewal of the Ganga water sharing treaty are cases in point.

2. State-to-People Relations

This axis of the India-Bangladesh relationship appears to be far more vexed. In the months prior to Hasina’s exit, there was a rather vociferous “India Out” campaign fuelled by opposition forces and social media influencers in the country. The campaign was an example of political forces and people across the region learning from their counterparts in other countries. In November 2023, the opposition in the Maldives led by Mohamed Muizzu had risen to power on the back of an India Out campaign. In Bangladesh, the campaign brought together people nursing a common set of grievances with regard to Indian policies related to water sharing, border security, the BJP-led Indian government’s policies with regard to neighbouring Muslim majority countries and immigration, along with the belief of strong Indian influence in Bangladesh’s domestic politics. For instance, a recent book published by Bangladesh’s former Foreign Secretary Touhid Hossain reportedly contended that “no one can ascend to the throne of Bangladesh without India's approval.” Perceptions of New Delhi’s proximity to and steadfast support for Hasina’s Awami League government despite evident democratic overreach or malpractices further fuelled this anger.

That said, on the asset side of the ledger, a recent PEW survey has shown that a majority of Bangladeshis, 57%, hold a favourable view of India. Only 19% of the people polled reported having an unfavourable view. In fact, the survey found that around 49% of people who did not support Hasina’s AL party also have a favourable view of India. The Indian state has indeed been rather welcoming of Bangladeshi citizens desiring to travel to the country legally. As per the MEA, Indian visas issued in Bangladesh constitute the largest visa operations India conducts worldwide. This is in terms of the volume of applications received per day as well as number of visas processed and issued. India also issues the highest number of visas to Bangladeshi citizens for medical purposes. In addition, the Indian state has expanded the number of scholarships available for Bangladeshi students. The country reportedly accounts for the third-largest foreign student community in India. However, the number of Bangladeshi students in India is just a small percentage of the total number of Bangladeshis who travel to study abroad. 

3. People-to-People Relations

There exist deep historical, cultural, and religious ties between the people of the two countries. In the past 15 years, there has been a steady increase in Bangladeshi tourists visiting India. Visitors from Bangladesh make up around 23% of India’s total inbound tourists. Meanwhile, Indian visitors are critical to Bangladesh’s tourism sector, accounting for just under half of all foreign visitors to the country in 2023. As discussed earlier, educational exchanges have also expanded over time. While there is greater scope for expansion of Indian private investment, a significant number of large Indian companies operate in Bangladesh. In terms of popular culture and media, the relationship has actually been a net negative. Bangladesh banned the cinematic release of Indian movies in 1972. Since then, contestation between film workers and distributors and cinema owners along with the lobbying of anti-India elites who fear Indian cultural hegemony have resulted in restrictions on Hindi movies. A brief experiment in 2010 to rescind the ban was quickly aborted. In 2023, Pathaan became the first Hindi movie to be released in cinema halls across Bangladesh in 50 years. News media engagement, meanwhile, has been extremely limited. Large Indian dailies or major English and Hindi TV networks do not have a permanent correspondent or presence for reporting from the country. Moreover, the largely inward-looking and often parochial nature of the Indian news media along with its indifference to issues related to Bangladesh has been a source of frustration. These are opportunities that can be tapped for deepening ties and building resilience.

Recommendations

Given the above assessment of Indian interests and the current state of affairs and ties across the three pillars, we recommend the following:

• First, the Indian government should engage with a cross-section of Bangladesh’s political elite. This should not be approached as short-term or transactional outreach. It should be a structural long-term process with the aim of cultivating ties with individuals and political parties. The aim is to ensure that at any given point of time channels of communication are always available and open. A key component of this strategy is to establish frameworks for education, training and exchanges with the civilian and military bureaucracy. Establishing a forum for periodic engagement between Indian and Bangladeshi lawmakers could be useful for building networks, sharing experience and shaping policy direction. Finally, creating educational opportunities for the offspring of the political elite in Bangladesh can be an effective tool to firewall against future challenges. 

• Second, while the political dust is yet to settle after Hasina’s ouster, the investment in a developmental partnership with Bangladesh is likely to hold India in good stead. The takeaway from this experience is that building deep economic bonds, particularly those that address essential and people’s livelihood needs, such as energy, food, infrastructure and water, can act as insulators during moments of political turmoil. This approach, therefore, must continue to be prioritised. In addition, India should persist with the discussions around operationalising the two Special Economic Zones agreed in Bangladesh. Of course, investors are likely to remain cautious given the political situation. Legal frameworks for investment protection, therefore, must be the focus of dialogues with the new government in Dhaka.

• Third, significant progress has been made on securing the border between the two countries. India must continue to insist that any new Bangladeshi dispensation ensure that the country’s territory is not used by terrorist or insurgent forces. In addition, furthering this process of border fencing, regular engagement between border forces and drug control agencies, along with exploration of new modalities to smoothen legal people-to-people connectivity should be an integral part of the bilateral dialogue.

• Fourth, it is imperative for the Union Government in India to ensure continuous engagement with the governments of states bordering Bangladesh. While there might be political differences between sub-national actors and the Union Government, having sustained communication internally, perhaps even through a formal mechanism, creates space for bargaining and sustainability of agreements with Bangladesh. This must not be jettisoned.

• Fifth, the Indian subcontinent is a unique geography, with borders dividing people that share deep historical, religious, linguistic and cultural bonds. This adds a peculiar domestic political dimension to foreign policy engagements. It is important for Indian political actors, particularly those holding constitutional positions, to appreciate how domestic political discourse can be inimical to foreign relations in the region. Instead, the Indian government should continue to facilitate tourist, student, cultural and even scholarly exchanges with Bangladesh.

• Sixth, the Indian state should support media exchanges and facilitate Indian media houses in establishing a permanent presence, through bureaus or correspondents, in Bangladesh. First hand accounts, verifiable information and in-depth local knowledge are critical in the information age.