Bangladesh Halts Naval Shipbuilding Agreement with India: A Shift in Maritime Strategy

Bangladesh has decided to scrap a $21 million shipbuilding deal with India’s Garden Reach Shipbuilders and Engineers (GRSE). This agreement, inked last year between the Bangladesh Navy and GRSE, was set to produce an 800-ton ocean-going tugboat. The project was part of a larger $500 million credit line from India aimed at bolstering Bangladesh’s defense capabilities.

The relationship between the two nations has soured as Prime minister Sheikh Hasina was ousted last August.Recently, india imposed restrictions on imports of ready-made garments from Bangladesh and blocked 11 key land routes for trade. This move followed Bangladesh’s own ban on yarn imports from India via land routes, leading many to view these actions as retaliatory measures.

The cancellation of the naval contract is seen as another sign of escalating tensions in their trade relations. GRSE announced this development through a filing with the stock exchange, stating that “the government of Bangladesh has cancelled the order,” in accordance with regulatory disclosure requirements.

Under Hasina’s leadership, India viewed Bangladesh as a promising market for military exports. The tugboat contract was celebrated as a significant step forward for Indian shipbuilders in accessing Bangladeshi markets. Additionally, GRSE had previously secured another deal worth $16.6 million with the Bangladesh Inland Waterways Authority to construct a trailing suction hopper dredger.

Simultaneously occurring, China continues to be the primary supplier of naval equipment to Bangladesh. With mohammad Yunus now at the helm as interim leader, there seems to be an increasing tilt towards strengthening ties with China in terms of defense cooperation.