Since the student-led uprising on August 5, 2024, and the fall of the Awami League government, Bangladesh-India relations have been plagued by political instability, diplomatic tensions, and mutual disputes over the past year. However, economic data paints a different picture. Import-export statistics show that India’s geo-economic influence over Bangladesh—ranging from food grains, cotton, and yarn to electricity and fuel—remains largely intact.
Geo-economic influence refers to the kind of economic impact one country can have over another that extends beyond markets or trade, creating strategic dependencies. Essentially, geo-economics exerts leverage through trade, essential commodities, raw materials, energy supplies, and infrastructure. Bangladesh’s vast land border with India, dependence on imported food and energy, and reliance on raw materials for the garment industry are key channels through which India maintains its geo-economic influence—a presence that has grown considerably during Sheikh Hasina’s 15-year tenure.
Since Sheikh Hasina’s fall, India has restricted visa issuance to Bangladeshis. After months of escalating disputes, both countries imposed reciprocal trade restrictions against one another. Yet statistics indicate that while political tensions over the past year affected diplomatic relations, they had little impact on trade flows.
According to the latest data from India’s Ministry of Commerce and Industry, India exported nearly $11.49 billion worth of goods to Bangladesh in FY 2024–25 (April–March). In the previous FY 2023–24, exports totaled $11.07 billion. This represents a 3.79 percent year-over-year growth in exports. These figures suggest that despite political friction and heightened tensions, the flow of imports from India to Bangladesh has remained stable, even showing slight growth.
With essential goods trade continuing, India’s exports are still growing, according to Abdul Wahed, Joint Secretary General of the India-Bangladesh Chamber of Commerce and Industry (IBCCI). Speaking to
Bonik Barta, he said, “In sectors where both countries face shortages or where products are essential, the import and export have kept growth positive. It hasn’t been negative. However, at ports where 300–400 trucks used to be handled daily, the number has now fallen to 150 trucks.”
Commenting on the potential for improvement under a political government, he added, “Before August 5, 2024, relations between the two countries were good, and business and trade were active. But after August 5, the distance in our relations caused trade volumes to decline. Hopefully, with a political government in power, this situation will improve.”
Whenever internal shortages arise in Bangladesh for food grains or essential commodities, India becomes one of the main sources for imports. Everyday items such as rice and onions are prime examples. Regardless of whether shortages are caused by domestic production gaps, seasonal supply issues, or market manipulation, a large portion of imports comes from India.
Recently, onion prices rose sharply in Bangladesh. As wholesale and retail prices increased, consumer pressure mounted. To control the situation, the government authorized onion imports from India in August. Imports began via trucks through the Hili land port in Dinajpur and the Benapole land port in Jashore. The arrival of Indian onions quickly impacted the market. Wholesale prices fell slightly, and the effect soon reached retail markets.
According to data from the trade division of India’s Ministry of Commerce and Industry, in FY 2023–24, imports of onions, garlic, and similar products from India to Bangladesh totaled nearly $2.07 billion (based on the four-digit HS code). In FY 2024–25, imports in this category rose to around $2.11 billion, reflecting a 1.78 percent growth over one year.
The same scenario applies to rice. At the end of the current Boro season, rice prices suddenly surged in the market. Due to production shortfalls and market instability, prices spiraled out of control. To calm consumer anger and stabilize supply, the government authorized imports. Import permissions (IP) were issued to importers starting August 12, after which rice began arriving from India. Following the entry of Indian rice into the market, prices started to decline.
According to data from the trade division of India’s Ministry of Commerce and Industry, in FY 2023–24 (based on the four-digit HS code), rice imports from India amounted to just $160 million. In FY 2024–25, that figure jumped to $3.61 billion, reflecting a growth rate of 2,174.16 percent.
On this matter, Dr. Selim Raihan, Executive Director of the South Asian Network for Economic Modeling (SANEM), told
Bonik Barta, “Commercial relations between Bangladesh and India have grown significantly over the past decade, although political and diplomatic tensions have occasionally been observed, especially recently. Yet statistics show that these tensions have not had a major negative impact on India’s exports to Bangladesh; in fact, exports have increased.
This continuity demonstrates that demand for goods, market capacity, and supply management between the two countries are based on solid fundamentals. The acceptance of Indian products in Bangladesh is a major reason for this export trend. Additionally, geographical proximity, cultural similarities, and interdependence have further deepened and stabilized this trade relationship. Particularly in sectors such as raw materials for exports, agricultural products, construction materials, and consumer goods, Indian products play a critical role in Bangladesh.”
According to data from the trade division of India’s Ministry of Commerce and Industry, in FY 2023–24 (based on the two-digit HS code), Bangladesh imported nearly $23.69 billion worth of cotton from India. In FY 2024–25, this increased to approximately $28.03 billion, reflecting an 18.34 percent growth in cotton imports.
Bangladesh, which ranks second globally in RMG exports, has more than 500 spinning or yarn mills. Yet, it still imports large quantities of yarn every year, most of which comes from India. In April 2025, the Bangladesh government halted yarn imports from India through land ports. However, even after these restrictions, imports from India decreased only slightly because shipments continued via sea ports. According to the National Board of Revenue (NBR), yarn imports from India fell by 230,000 kilograms in the three months following the restrictions compared with the previous three months. Previously, the country imported an average of 50 million kilograms of yarn per month. After the restrictions, imports averaged 40 million kilograms in May and June, before exceeding 50 million kilograms again in July.
This indicates that India’s influence over the raw materials essential to the RMG sector is so deep that political tensions or temporary policy restrictions do not halt trade flows. In this way, India’s geo-economic influence remains intact even in Bangladesh’s largest export-oriented sector.
Recently, however, Bangladesh has taken steps to increase cotton imports from the United States. This initiative is part of broader measures to reduce trade deficits with the U.S., especially amid increased tariffs on Bangladeshi products. In August, private-sector entrepreneurs traveled to the U.S. as representatives of Bangladesh’s private sector.
During the visit, three textile companies signed memoranda of understanding (MOUs) with U.S. firms to import 19,000 tons of cotton. Salma Group signed an agreement with Cargill Incorporated for 6,000 tons of cotton worth $12 million. Asia Composite signed a similar agreement, and Mosharaf Group signed an agreement with Louis Dreyfus Group for 7,000 tons of cotton worth $14 million.
Bangladesh imports an average of 1,780 megawatts of electricity daily from India, accounting for more than 15 percent of the country’s total electricity demand. Due to fuel shortages and substantial outstanding payments at local power plants, the national grid has increasingly relied on electricity supplied by Indian state-owned companies and Adani Group power plants. The Interim Government is paying off the disputed dues to Adani more quickly than the previous Awami League government.
Energy sector insiders say Bangladesh could meet its entire electricity demand without importing from India, as domestic generation capacity far exceeds demand. However, due to insufficient fuel supply, many power plants remain idle. In particular, the 7,000-megawatt coal-based power plants cannot operate at full capacity because of fuel shortages, leaving the Bangladesh Power Development Board (BPDB) dependent on imports. There is no option to bypass these plants until fuel supplies are ensured and large gas-based plants can operate continuously.
According to BPDB data, the country’s gas-based power plants have a capacity of nearly 12,500 megawatts, but only 5,500 megawatts can be utilized. Furnace oil–based plants have a capacity of 5,581 megawatts, but due to costs and fuel constraints, only 1,500 to 2,500 megawatts can be generated. Coal-based plants have a capacity of 7,179 megawatts, of which a maximum of 4,500 megawatts can be produced. Additionally, solar power capacity can only be used during daylight hours. Dependence on India extends beyond electricity to fuel as well, with substantial amounts of petroleum arriving via cross-border pipelines.
Former Ambassador M Humayun Kabir told
Bonik Barta, “There are several layers to Bangladesh-India relations. Some of these layers are almost impossible to separate. Geographically, Bangladesh is surrounded by India on three sides. There is no way to ignore this position. The border cannot just be moved.”
He added that trade operates mainly on supply and demand, saying, “If there is a need, business and trade will continue. Alternatives can be explored, and the government should do so. But the questions remain of how quickly imports from alternative sources can be arranged and whether costs will increase.”
He further noted, “Some aspects of the bilateral relationship cannot be changed. The main problems arise from political, diplomatic, and perceptual factors. The political aspect, in particular, faces repeated challenges. However, in certain areas, bilateral relations cannot be easily halted.”
Whenever internal shortages arise in Bangladesh for food grains or essential commodities, India becomes one of the main sources for imports. Everyday items such as rice and onions are prime examples. Regardless of whether shortages are caused by domestic production gaps, seasonal supply issues...
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In a strategic move to dominate the global ship recycling industry, India’s Modi government is finalising a Rs 4,000 crore ($500 million) incentive package aimed squarely at capturing Bangladesh’s commanding 46 per cent share of the global shipbreaking market.
According to The Economic Times, citing government sources, the Indian cabinet is expected to approve the plan by the end of September.
The scheme, set to roll out in 2026 and run for 10 years, offers shipowners a credit note worth 40 per cent of a vessel’s scrap value if they dismantle their ships at Indian yards. These credits can be redeemed to purchase new Indian-built ships within three years, or traded/sold in bundles, creating a flexible financial instrument to lure global sellers.
Battle for supremacy: Alang vs Chattogram
Though India’s Alang Ship Recycling Yard in Gujarat is the world’s largest by physical capacity, it has steadily lost market share to Bangladesh’s Chattogram and Pakistan’s Gadani yards, largely due to lower labour costs and less stringent environmental regulations.
In 2023, Bangladesh captured 46 per cent of global shipbreaking tonnage, while India held just over 30 per cent. Now, India is fighting back, not just with subsidies, but with infrastructure.
The government is also exploring the development of new shipbreaking hubs on India’s east coast, closer to Southeast Asian shipping lanes and directly competing with Chittagong’s geographic advantage. This eastward expansion could cut transit costs and time for vessels coming from East Asia and the Middle East.
Timing is key: Scrap supply set to surge
Market dynamics are shifting in India’s favor. While the Russia-Ukraine war initially extended vessel lifespans due to higher freight rates and rerouted traffic, analysts now predict a “scrap tsunami” as aging fleets reach end-of-life and new environmental regulations (like the EU’s Ship Recycling Regulation and IMO’s EEXI/CII standards) force older, inefficient ships to retire.
“Owners are sitting on aging tonnage. When the dam breaks, we want them to break those ships in India not Bangladesh,” said a senior official in India’s Ministry of Ports, Shipping and Waterways.
Bigger play: $3 billion maritime fund to boost Indian shipbuilding
This shipbreaking push is part of a broader maritime industrial strategy. The Modi government is also poised to approve a Rs 25,000 crore ($3 billion) Maritime Development Fund this month aimed at revitalising India’s shipbuilding sector, reducing reliance on foreign-flagged vessels, and creating a circular economy: break foreign ships → recycle steel → build Indian ships → export globally.
The fund will support R&D, green ship technologies, port modernization, and skill development and positioning India not just as a dismantling hub, but as a full-spectrum maritime manufacturing power.
What this means for Bangladesh
Bangladesh’s dominance in shipbreaking, built on low wages, beaching methods, and high-volume throughput, now faces its most serious challenge yet. India’s credit note scheme effectively subsidizes up to 40 per cent of scrap value, undercutting Bangladesh’s price advantage.
Industry insiders in Chattogram are already sounding alarms.
Global implications
The move also aligns with Western pressure for “greener” ship recycling. India has invested heavily in upgrading Alang to meet EU standards unlike most Bangladeshi yards, which still operate on tidal beaches with limited environmental controls. The incentive scheme may attract EU-flagged vessels seeking compliant, subsidised recycling further squeezing Bangladesh out of premium markets.
In a strategic move to dominate the global ship recycling industry, India’s Modi government is finalising a Rs 4,000 crore...
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