The relationship between Bangladesh and India has reached an all-time low, centred around the downfall of Sheikh Hasina and the issue of alleged minority persecution. The question now is, which country will suffer more from this deterioration? If India persists with its policy of exerting pressure on Bangladesh through false accusations, India may bare a greater risk.
During Sheikh Hasina's 16-year rule, India gained access to Bangladesh's Mongla and Chattogram seaports, Ashuganj river port in Brahmanbaria, and the country's national highways. Using these multi-modal communication systems, India has been transporting goods between its western regions and seven north-eastern states more cheaply and quickly.
This transit corridor, obtained from Bangladesh at a nominal cost, drastically reduced India’s transport distance. Previously, transporting goods from Kolkata to Agartala required more than 1600 kilometre journey via Siliguri. Now, by using Bangladeshi territory, India covers only 550km, completing the journey within 10 hours.
While India benefits significantly from this road-sea-river multi-modal transit corridor, the fees Bangladesh receives are negligible and inadequate to cover the maintenance and repair costs of its roads and ports. Furthermore, Bangladesh faces risks such as accidents, pollution, traffic congestion, agricultural land shrinkage due to road expansion, and security threats.
Bangladesh has built this infrastructure with loans, repaid with taxpayers’ money at high costs, yet these facilities are being used for nominal fees for Indian interests. In exchange for India's use of Bangladesh's Mongla and Chattogram ports, Bangladesh collects a very minimal amount as customs transit and transshipment fees.
For example, document processing fees are Tk30 per shipment, transshipment fees are Tk20 per ton, security charges are Tk100, administrative charges are Tk100, and scanning fees per container are Tk254 plus 15% VAT. Additionally, for transporting goods by road after unloading at the port, a fee of only Tk1.85 per kilometer is charged. For providing security, a police escort fee of Tk85 per kilometer is levied per container.
Overall, Bangladesh's earnings from this arrangement are extremely negligible. However, when permission was granted to India to use these two seaports, it was stated that Bangladesh would earn $500 million annually.
Similarly, Bangladesh earns a minimal amount for allowing India to use the Ashuganj river port in Brahmanbaria. For example, the charges for container loading and unloading or landing and shipping are Tk34.50 per ton, supervision charges are Tk10 per ton, transit fees are Tk130 per ton, customs escort fees are Tk50 per ton, and berthing charges for Indian ships at the port are Tk315 per day.
Containers carrying Indian goods are unloaded at Ashuganj river port and then transported to Agartala through the Akhaura land port, covering a distance of only 52 kilometers. This is a significant advantage for India. However, Bangladesh's earnings from this arrangement are insufficient. In exchange for providing India with this corridor for transporting goods, Bangladesh should have received at least half of the amount India saves through this route. That would have been Bangladesh's fair share.
India cannot be an excellent trade partner by upsetting millions of Bangladeshis
In June 2024, just before Sheikh Hasina fled to India, she visited India for a state trip, where she signed 10 Memoranda of Understanding (MoUs) with Indian Prime Minister Narendra Modi. These agreements, part of a shared vision for mutual prosperity, included commitments on connectivity and trade, as well as maritime economy and Indo-Pacific initiatives. However, the most discussed aspect was Bangladesh’s promise to provide rail transit for Indian goods.
Over her 16 years in power, Hasina gave India unrestricted access to transit, corridors, transshipment, and connectivity, but in return, Bangladesh only received promises, such as simplified visa policies.
The number of agreements signed between Bangladesh and India during Hasina's tenure is largely unknown. It is estimated that from 2010 to 2024, at least 20 agreements and 66 MoUs were signed, though the actual number may be much higher. In August 2024, after the interim government's Foreign Affairs Advisor M Touhid Hossain assumed office, he announced a review of these unequal agreements, which angered India. India has since adopted a policy of pressuring Bangladesh to ensure the continuation of these one-sided benefits.
Bangladesh's people, however, demand the cancellation of all unequal agreements. They aspire for balanced trade policies with India. It is unacceptable to Bangladeshi people to continuously providing benefits to India without receiving anything significant in return.
Bangladesh faces a massive trade deficit with India, which is detrimental to its interests. In the 2023-24 fiscal year, the total trade between the two countries amounted to $13 billion, with Bangladesh importing $11.07bn worth of goods from India and exporting only $1.85bn. This imbalance highlights India's dominant trade position.
Bangladesh imports various goods from India, among which cotton is the top product. The second most imported product is food grains. Additionally, Bangladesh imports sugar, onions, chilies, vegetables, spices, fruits, stones, coal, limestone, bitumen, raw materials for the garment industry, yarn, textiles, footwear, and chemicals used as raw materials in different industries from India.
However, these products are not exclusively available in India only. If needed, Bangladesh can import these goods from other countries around the world at the same price and with better quality. However, established supply chains make sudden changes challenging. If the people of Bangladesh are willing to endure temporary inconveniences, it is possible to shift to alternative sources, just as Nepal did in 2015 when India imposed an unofficial trade blockade.
Trade and business cannot thrive through coercion or force. India cannot be an excellent trade partner by upsetting millions of Bangladeshis. If India continues its aggressive policies, it risks damaging its own interests, as it earns several times more from trade with Bangladesh.
Additionally, millions of Bangladeshis visit India annually for tourism and medical treatment, contributing significantly to India’s foreign exchange earnings. Bangladesh is a top source of revenue for India’s tourism sector, but these travelers can easily shift to other destinations. Similar thing may happen to medical treatment seekers. Furthermore, several hundred thousand Indians work in Bangladesh, remitting large sums to India.
China offers a viable alternative to India for investments or loans in Bangladesh’s financial sector, as it possesses greater capacity than India. Any infrastructure loan decisions are ultimately dependent on Bangladesh's preferences. So, overall India’s continuous pressure on Bangladesh will have minimal impact and Bangladesh is unlikely to be significantly frightened by India's threats.
Zubair Hasan is a Political Analyst. Email: zubairjcc1163@gmail.com