The cat-and-mouse game derailing India's projects in Bangladesh

The development cooperation between the two nations started in 2010 with India offering Bangladesh its single largest line of credit of $1 billion.

Another paper election is over in Bangladesh. Sheikh Hasina’s Awami League is back in power for the fourth consecutive term. The new government in Dhaka may serve India’s immediate security interests. But will it help Delhi to cement the ties through development cooperation, trade and commerce?

2010 To 2017: The Hoary Phase

There is no clear answer to this question. The development cooperation between the two nations started in 2010 with India offering Bangladesh its single largest line of credit of $1 billion.

Prime Minister Narendra Modi took Indian commitments to an astronomical high. Between 2015 and 2017, India offered an additional $7 billion in soft credit and grants ($500 million) for nearly 30 projects in energy, infrastructure, health, education etc.

An additional $1.6 billion ultra-soft finance to 2X 660 megawatt (mw) Bangladesh-India Friendship Power Company (BIFPC) at Rampal and; a nearly $2 billion 2X800 mw Adani Power facility in Jharkhand for dedicated supply to Bangladesh are extra. Both the projects are completed.

The huge investments in India’s trade infrastructure with Bangladesh; nearly two to three-fold rise in visa approvals by India; Covid time supply of vaccines, food, raw materials etc; need no introduction.

Any honest review will prove that barring the sole exception of Teesta water sharing, Modi was exceptional in his delivery. From the land-border agreement to expanding the scope of energy cooperation; Bangladesh got almost everything it had asked for.

Dhaka responded to it positively till 2017. But since then, it has been a different story.

India: Hasina’s Fall Guy

Two things happened in 2017. First, Hasina blamed India for her defeat, back in 2001. Second, she gave precedence to easy Chinese finance over Indian projects. Together they had effectively given China a free run in Bangladesh.

Delhi earned the ire of common Bangladeshis for offering key support to Hasina, in January 2014 Opposition-free election. India was keen for a more competitive Parliament in the 2018 election.

By referring to the 2001 election results, Hasina fuelled anti-India sentiments to put Delhi in a bind. Bangladeshis got an official confirmation of what they always preferred to believe – India was behind all their miseries.

She ended up rigging the December 2018 polls heavily. Common Bangladeshis thought it was done with Indian support. Anti-India sentiments peaked. Hasina used the opportunity to neglect Indian interests in her third term.

According to Dhaka-based Prothom Alo, “Bangladesh lost interest in Indian projects” and scrapped 12 such projects worth over $2 billion in the last five years. Barely one-fourth of the Indian line of credit was utilised so far.

China’s Easy Money Pipeline

Bangladeshi media cite three primary reasons – 75 percent sourcing obligation from India, high bids by Indian contractors, and the hassle of taking approval at every stage of implementation – as prime irritants in Indian projects.

The Indian system is not beyond criticism. However, Chinese loans come with 95 percent sourcing obligation and at higher interest. There is no way to ensure transparency on the cost of Chinese supplies. The attraction lies in the easy disbursement of funds.

Almost all Chinese projects are hugely pricey, offering Beijing space for debt-trap diplomacy. They extend more loans as the project cost goes up. Bangladesh’s abysmally corrupt business-politics nexus enjoys flow of easy money.

According to the World Bank (which had once pulled out of the Padma bridge project citing irregularities) the per unit cost of infra-building in Bangladesh is the world’s highest. From metro rail and bridges to expressways - per km cost is often four to five times of India.

The truth is that Dhaka did not want to implement Indian projects.

Neglecting Indian Interests

The neglect is palpable. Bangladeshi authorities had shut down the Rampal power plant five times between December 2022 and July 2023, citing a lack of fuel. Repayments to the ‘below market rate’ loan should suffer.

Ensuring port access to Northeast India through Bangladesh is a stated objective behind India’s support to the ruling dispensation in Dhaka. Hasina is using this as an eternal bargaining chip and delaying the delivery.

India-financed Ashuganj (Bangladesh) river terminal and 50km road to Agartala in Tripura is far from reality.

At Sabroom border in Tripura, India will shortly inaugurate a modern rail-road connected cargo complex to access Chattogram port in Bangladesh. Not a brick is laid on the mirror facility on the Bangladesh side.

Delhi completed a road bridge (over river Feni) to connect Sabroom with Ramgarh in Bangladesh, two years ago. But the India-sponsored connecting highway on the Bangladeshi side is absent. The groundbreaking ceremony was held in May 2023.

Two instances will amply prove Bangladesh’s intentions. The official approval of India’s port access came just ahead of the 2024 polls when Hasina needed key support. But before that, in August, her government scrapped a $400 million Indian project to build a container terminal at Chattogram port.

Someone is playing cat and mouse with India.

Pratim Ranjan Bose is an independent columnist, researcher, and consultant. His X handle is @pratimbose. Views are personal and do not represent the stand of this publication.