Bangladesh Crisis
Leaves India with Major Foreign Policy Challenge, Uncertainty Over Trade Ties
Lack
of political stability can compound Bangladesh’s economic woes that could
disturb South Asia region, analysts say
·
Hasina
reciprocated Delhi’s gestures and, as recently as last month, chose India over
China for a US$1 billion Teesta River development project despite little
forward movement on the issue of sharing of waters.
·
Bangladesh
cleared the use of Chittagong and Mongla Ports by India for transit and transshipment of cargo
The
sudden exit of Bangladesh’s Prime Minister Sheikh Hasina from the country in
the wake of mass student protests is threatening to become one of India’s worst
foreign policy headaches that is likely to test all of its capability to
resolve.
After
having fled the country, Hasina landed in India’s Hindon
Air Base on the outskirts of the capital New Delhi, where she is likely to be
based temporarily before heading to a European destination, according to local
media reports.
India’s
Foreign Minister S Jaishankar told the country’s upper house of parliament on
Tuesday that Hasina had “at very short notice … requested approval to come for
the moment to India” after she resigned the day before.
The
minister said the government was in touch with authorities to ensure the safety
of the 19,000-strong Indian community in Bangladesh, out of whom 9,000 are
students.
“The
bulk of the students have already returned to India in the month of July on the
advice of the High Commission,” Jaishankar said, adding that border forces had
also been instructed to be “exceptionally alert in view of this complex
situation”.
Throughout
her 15-year rule, Hasina had maintained strong ties with Delhi that had
blossomed into Bangladesh emerging as one of India’s top export destinations
for a variety of goods and services – from cotton yarn to make garments to
information technology.
The
booming trade with Dhaka was also promising to become an anchor in boosting
moribund trade within the Bay of Bengal region that sits at the nexus of
strategic trade routes positioned between the Indian and Pacific Oceans.
“We
will have to wait and watch how things happen. The government of India had
invested a lot in Hasina’s government and virtually given her everything that
she wanted,” said Biswajit Dhar, professor at the Delhi-based research
institute Council for Social Development.
Over
the course of a decade, Bangladesh’s economic rise had propelled it almost to
the rank of an “Asian Tiger” though growth had tapered in the last 1½ years and
Dhaka had started drawing substantial foreign investments.
Bangladesh
is India’s largest trade partner in South Asia, and India is the second-largest
trading partner for Bangladesh in Asia after China.
According
to a report in India’s leading business daily The Economic Times, Indian
exports to Bangladesh fell to US$11 billion in 2023-24 from US$12.21 billion in
2022-23, while imports decreased to US$1.84 billion from US$2 billion in the
same period.
Bangladesh’s
primary exports to India are garments, accounting for over half of shipments.
Delhi
has gone out of its way to court Bangladesh, agreeing to even concede a larger
share of water flow to the Teesta river in 2011 – a
deal that was scuppered at the last minute because of objections raised by
India’s West Bengal state.
“There
is now no certainty on when the next stable government will take over in
Bangladesh and whether it will continue the policies consistently,” Dhar said.
Last
year, Bangladesh cleared the use of Chittagong and
Mongla Ports by India for transit and transshipment of cargo, potentially slashing
logistics time and costs from India’s landlocked and resources-rich northeast
that was planned to be extended to Southeast Asia through development of
highways, coastal shipping and even air services.
India’s
trade ties with Bangladesh also serve as a cornerstone for a planned free trade
area connecting Myanmar, Thailand, Bangladesh, Bhutan, India, Nepal and Sri
Lanka who are members of the Bay of Bengal Initiative for Multi-Sectoral
Technical and Economic Cooperation (BIMSTEC) headquartered out of Dhaka.
Leaders
of the seven nations are due to meet next month in Thailand to solidify the
cooperation.
Delhi’s
ties with Hasina’s government were important not only because of trade. She had
successfully kept at bay radical militant groups who wanted to target India,
analysts say, pointing out all that is up in the air with Hasina’s departure.
Bangladesh
together with strife-torn Myanmar is threatening to compound headaches for
Delhi on India’s eastern flank, he added.
India
shares a long and porous border with Bangladesh that has been a conduit for
gold smuggling and illicit weapons. If the unrest continues, a wave of illegal
immigrants is also likely – a problem that has eased in recent years because of
more economic prosperity.
But
Bangladesh’s economy has been battling persistently high inflation of close to
10 per cent in recent months, with workers earning some of the lowest wages in
the world.