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Why China isn’t a threat to India-Bangladesh relations
Prithwi Raj ChaturvediPublish : 18 Aug 2023, 02:35
Bangladesh and India have a unique relationship not only due to their geographical proximity but also because of their same socioeconomic background, shared history, and common culture. The Liberation War in 1971 also resulted in the formation of a blood connection between the two countries, a phenomenon that is noteworthy for its rarity.
Since then, both countries have maintained a long and productive diplomatic relationship in the areas of politics, culture, trade, and business.
Bangladesh plays a significant role in India's “neighbourhood first” policy. Delhi under Narendra Modi has always supported Bangladesh, whether it was prioritizing Covid vaccination delivery or arranging an evacuation of Bangladeshis trapped in the Russia-Ukraine war. Similar to this, Bangladesh, under the leadership of Sheikh Hasina, has won Indian hearts by addressing all of their concerns, from connectivity to security.
Indian nationals have expressed confidence in Hasina's management of terrorist operations in Bangladesh. The post-2009 crackdown on Northeast Indian separatists by the Hasina government has been the single most important factor that has led to a huge drop in insurgency in the NE region -- an 80% drop in rebel violence, according to the Indian home ministry.
PM Hasina succeeded in apprehending the cross-border anti-Indian insurgency groups and turning them over to Indian authorities, thanks to her administrative prowess.
After coming to a settlement on matters relating to maritime delimitation, land border arrangements, enclaves, sea shipping, and inland waterways, both nations are now at a favourable point in their diplomatic ties. Since the Sheikh Hasina government came to power in 2009, trade ties with India have greatly improved, with Bangladesh now India's largest trading partner in South Asia. In 2021–22, the total trade between India and Bangladesh was worth $16.38 billion, with India exporting goods worth $14.58bn and importing goods worth $1.8bn.
In an advancement of bilateral relations, Bangladesh and India signed a Framework Agreement on Cooperation for Development, under which both parties agreed to narrow trade imbalances and expand their cooperation to the sub-regional level. Both countries are now working towards signing a Comprehensive Economic Partnership Agreement (CEPA), which emphasizes three specific dimensions: Trade in goods, services, and investments.
Both governments have recently undertaken initiatives to boost connectivity. Multi-modal transit between the Indian mainland and the country’s northeast is increasingly becoming a reality with the development of “connectivity infrastructure” by Bangladesh. Indian businessmen invested in Bangladesh’s garment industry are looking to expand their manufacturing to Tripura, opening fresh vistas for industrialization in the Northeast. Agartala, emerging as India’s third internet gateway due to its connection with Bangladesh’s internet backbone, now offers a huge opportunity for the growth of the IT industry in the Northeast.
In the past eight years, India has extended credit lines worth $8bn to Bangladesh for developmental projects in sectors including roadways, shipping, ports, and railways. This makes Bangladesh the recipient of India’s largest concessional credit lines to a single country around the world. India's projects in Bangladesh include an upgrade of the Ashuganj river port and the Akhaura land port road, with a credit line of more than $400m. A road project connecting the India-Bangladesh border is also being worked upon, with a further line of credit worth $80m from India.
However, it is not only the trade and economic aspects that make the relations between the two countries a role model for the world, but rather their mutual trust, respect, and win-win cooperation. The Indian prime minister has always had positive relations with Bangladesh as a result of the goodwill gestures made by PM Sheikh Hasina. PM Modi, in one of his first foreign visits after the Covid-19 outbreak, visited Bangladesh to participate in its Golden Jubilee of Independence.
In spite of such a level of engagement between the two governments, some quarters are criticizing Bangladesh, terming it a “China-tilting” country, without giving any specific data or analysis.
There is a misperception among many people that Bangladesh could fall into the Chinese debt trap, which is baseless. Bangladesh has decades of experience managing aid and loans, working with a variety of bilateral and multilateral funders. Bangladesh has received most of its loans from international agencies, with Japan being the largest bilateral lender (19%).
Clearly, Bangladesh’s external loan portfolio is dominated by the World Bank, which accounts for 36% of total external loans, and the Asian Development Bank, which accounts for 23%. The data clearly shows that Bangladesh's loan from China is a trifling amount compared with the country's GDP of $416bn. Bangladesh has a low risk of external and overall debt distress despite higher external borrowing in recent terms, said the International Monetary Fund in February.
Again, Bangladesh’s relations with China are only based on trade and commerce. Chinese projects in Bangladesh are mainly in infrastructure building, the energy and power sector, transportation networks, and municipal services. It is observed that Bangladesh is aware of geopolitical sensitivities and takes on Chinese projects that have economic viability.
Previously, it cancelled several China-proposed projects due to a lack of commercial feasibility. For example, Bangladesh did not allow a $14bn Chinese investment in the Sonadia deep sea port as Japan's proposed Matarbari was more viable. Two railway projects worth a total of $3.5bn were also scrapped by the Bangladeshi authority due to their lower financial viability.
Reports claimed that, over the past decades, Bangladesh has received $2.6bn in FDI from China. However, in recent months, the inflow of Chinese FDI in Bangladesh has been low compared to other major development partners. China is the 5th largest source of FDI behind the US, UK, Singapore, and South Korea in FY 2022–23.
The above-mentioned data indicate that the allegation suggested and accepted by many pundits that Bangladesh is tilting towards China is only hype. Unlike Pakistan and Sri Lanka, Bangladesh has conducted prudent macro-economic management in order to avoid China’s overdependence.
Bangladesh seems aware that if it falls short of China’s debt diplomacy, it will be a huge loss for India because an economically strong Bangladesh is an asset for India. So, even an economic downslide due to the Covid-19 pandemic and the Russia-Ukraine war couldn’t drive Dhaka into China’s influence.
On the other hand, the steady growth of the India-Bangladesh bilateral partnership proves that India-Bangladesh ties being a role model of good neighbourhood diplomacy is not a shallow statement made by Sheikh Hasina to present a certain idea of the bilateral relationship.
It is rather a strong testimony to the power of cooperation that can lead to mutually beneficial relations while also elevating their economic, social, and political statuses in the global forum.
Prithwi Raj Chaturvedi is a Researcher and Political analyst from New Delhi, India
