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Bangladesh Is India's South Asian Largest Trade Partner
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Bangladesh Is India's South Asian Largest Trade Partner


India was the first nation to acknowledge Bangladesh as a distinct and independent state, and the two nations forged diplomatic ties as soon as Bangladesh gained its independence in December 1971. Bangladesh and India are connected on a civilizational, cultural, social, and economic level. There are many things that bring the two nations together, including their shared history and cultural heritage, affinity for music, literature, and the arts. This similarity can be seen in our multifaceted and developing relationships. Due to their complementary geographical locations, Bangladesh and India have a chance to further enhance their economic ties and connectivity.

The two nations have consolidated their political, economic, trade, and cultural ties over the past four decades and have created a strong institutional framework to foster trade partnership. Out of the 54 rivers shared by the two nations, one, the Ganges, has already been the subject of a treaty, and efforts are being made on both sides to hasten the completion of other such agreements. Additionally, both nations are working together to conserve the entire Sundarbans environment, which is a valuable source of biodiversity. For India, Bangladesh is a significant trading partner. Two border haats are already operational with a few more on the anvil along the India-Bangladesh border. Investment by Indian companies (Airtel, CEAT, Marico etc.) in Bangladesh continues to grow with the signing of bilateral Investment Promotion and Protection agreement. For the first time in their post-independence history, India and Bangladesh have established inter-grid connectivity for the flow of bulk power from India to Bangladesh.

India has consistently provided Bangladesh with humanitarian and financial support throughout its time of need to help it cope with natural calamities and floods. Then-External Affairs Minister Shri Pranab Mukherjee visited Bangladesh in December 2007 to convey India's condolences for the deaths and destruction caused by Cyclone "Sidr," which struck the coastal parts of Bangladesh in November 2007. Additionally, he paid a visit to the cyclone-affected districts and offered the Bangladeshi people in need the sympathies of India. India had announced a comprehensive aid program before the visit. Aid worth over Taka 250 crore (over US $ 37 million), including supply of relief materials consisting of medicines, tents, blankets, ready-to-eat meals, portable water-purifiers, 1,000 MT of skimmed milk powder and 40,000 MT of rice was handed over to Bangladesh. The Government of India also worked with the Government of Bangladesh for rehabilitation of ten cyclone-affected villages in the southern part of Bangladesh.

Strengthening Connectivity: Road Infrastructure and Trade

It is expected that Modi and Sheikh Hasina will inaugurate the ‘Swadhinata Sarak’ (25 km long link road). The proposed name of this historic road that connects Mujibnagar in Bangladesh to Nadia in West Bengal, was put forward by Bangladesh to commemorate the road’s significant contribution during its War of Independence. Having shared a common heritage, the friendly neighbours emphasise reopening historical links between them to relive past glories and strengthen their bonhomie. In addition to re-establishing five historical rail links, the opening of the Swadhinata Sarak stands emblematic of growing fraternal ties between India and Bangladesh—ties that go beyond just fulfilling strategic interests. 

India-Bangladesh trade partnership

On the trade front, there is a strong possibility that the Comprehensive Economic Partnership Agreement (CEPA) shall come to be finalized during Sheikh Hasina’s visit. Following Bangladesh’s approval of the draft agreement, India’s approval stands pending. It is quite likely that the CEPA draft shall be discussed by the Prime Ministers when they meet. Both India and Bangladesh stand to gain from signing the CEPA. The agreement enables the countries to retain and secure all benefits in their trade ties, even after Bangladesh’s transition to a developing country. As a result, it is being hailed as a landmark agreement in India-Bangladesh diplomatic ties.

Mutual Understanding in Water Sharing

A Memorandum of Understanding (MoU) on sharing the waters of the Kushiyara river was also finalized by the two parties. Therefore, it is expected that the two presidents will finalize the Kushiyara water-sharing agreement. The river begins in Nagaland and flows along the Indo-Bangladesh border before picking up tributaries from the Northeastern Indian states of Manipur, Mizoram, and Assam (NER). Additionally, the river is a component of India's National Waterway 16 (NW 16).

The waterway has been crucial in linking the landlocked NER with the coastal city of Kolkata via India-Bangladesh protocol routes. Passing through Nagaland and the neighboring states of Manipur and Assam, the waterway forks into two rivers—the Kushiyara and the Surma. After meandering for a considerable distance, the rivers come to form the Meghna River at their confluence point. It is to be recalled that NW 2 is the main protocol route between India and Bangladesh from Kolkata-Sundarban-Chalna-Khulna-Mongla, Kaukhali-Barisal-Narayanganj-Aricha-Dhubri, Pandu-Silghat. Water-sharing arrangements for the common rivers that are likely to get finalized in the upcoming visit can be seen as a starting point for more of such shared arrangements. The two countries must reach a consensus on water-sharing arrangements for all the 54 rivers that flow across their borders, to weed out any potential irritants in trade partnership when it comes to water sharing.

Enlivening Cross Border Energy Cooperation

In addition to the already existing and extremely crucial areas of trade, connectivity, and water sharing that have come to characterize India and Bangladesh's trade relationship over the years, this initiative will reinforce the burgeoning domain of energy security in India-Bangladesh relations.

The 1,320 MW coal-based power plant is Bangladesh’s largest power plant till date and is near the Mongla Port and Sundarbans. While the power plant project marks a growth in energy cooperation between the neighboring countries, it has also raised environmental concerns given its proximity to the Sundarbans. The project has been criticized for its negative impact on the Sundarbans’ waterways, especially on the Pasur River’s fragile river ecosystem since it could largely diminish its aquatic biodiversity, especially its fish stocks. After receiving a lot of flak for its environmental costs, concerned authorities had to step in and make it clear that the plant, in fact, employs cutting-edge technology that mitigates its environmental impact by keeping down air and water pollution.

This initiative is based on a 50-50 joint venture between the Bangladesh Power Development Board (BPDB) and the Indian state-run National Thermal Power Corporation (NTPC), While India gains from the joint project by winning Bangladesh’s favor, Bangladesh has much to gain from this lucrative venture due to its strategic location near the Mongla Port, as it seeks to export coal from the power plant to countries such as  Indonesia, South Africa, and Australia, which in turn would garner large economic revenue for the country.


From having shared historical, social, and cultural affinities to working towards fulfilling common interests, India-Bangladesh ties have always been marked by the salient values of openness, mutual trust, cooperation, and mutual respect. As the friendly neighbors take on newer initiatives to enhance their ties in the essential domains of trade, connectivity, energy and water sharing, leaders from both countries have come to define this phase as a ‘Sonali Adhyay’ (golden chapter) in trade partnership. In fact, Prime Minister Sheikh Hasina’s much-awaited visit to India after a period of three years, following the COVID-19 pandemic, can be seen as yet another milestone in this golden phase. Nevertheless, a question still haunts whether this visit of Hasina can give political leverage to her party Awami League in the 2023 election in Bangladesh.

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