Sheikh Hasina's Ouster: What It Means For India-Bangladesh Relations And Regional Stability

The sudden ouster of Sheikh Hasina following intense protests and political upheaval in Bangladesh marks a significant shift in the country's political landscape. This change is poised to have far-reaching consequences for the robust and multifaceted relationship between India and Bangladesh that has developed over the past 15 years of Hasina's tenure.

Economic and Trade Relations

Background of Trade Relations

Under Sheikh Hasina's leadership, Bangladesh emerged as a key economic partner for India. The bilateral trade between the two nations reached $13 billion in the financial year 2023-24, reflecting a deep economic interdependence. Bangladesh is the largest export destination for Indian cotton, accounting for 34.9% of India's total cotton exports, amounting to $2.4 billion in FY24, as reported by India Express.

In addition to cotton, other significant Indian exports to Bangladesh include petroleum products and cereals. Conversely, India imports readymade garments from Bangladesh, which were valued at $391 million in FY24. Bangladesh has cemented its position as a global textile hub, contributing to this dynamic trade relationship.

Potential Impact of Hasina's Ouster

Hasina's departure could introduce a level of uncertainty in these well-established trade relations. In October 2023, discussions began on a Free Trade Agreement (FTA) during a meeting of the Joint Working Group on Trade in Dhaka. The FTA aimed to reduce or eliminate customs duties on traded goods, thereby fostering greater trade and investment, as reported by Indian Express.

According to a 2012 World Bank working paper, a full FTA could boost Bangladesh's exports to India by 182%, while a partial FTA could lead to a 134% increase. Enhanced transport infrastructure and connectivity could see Bangladesh's exports rise by 297%, with India's exports potentially increasing by 172%.

However, with the interim government's approach yet to be determined, the future of the FTA remains uncertain. A delay or cancellation of the FTA could slow down the growth of bilateral trade, affecting businesses and economies in both countries.

Infrastructure and Connectivity

Ongoing Projects

Infrastructure and connectivity projects have been central to the strengthening of India-Bangladesh ties. India extended three lines of credit to Bangladesh in 2016, totalling $8 billion, aimed at developing road, rail, shipping, and port infrastructure. In November 2023, two significant joint projects were inaugurated: the Akhaura-Agartala cross-border rail link and the Khulna-Mongla Port rail line.

The Akhaura-Agartala link, the sixth cross-border rail line, has significantly reduced travel time between Agartala and Kolkata from 31 hours to 10 hours, enhancing trade, tourism, and people-to-people exchanges, as per media reports.

Impact of Political Changes

The political transition could pose challenges to these infrastructure projects. Any instability or shift in policy by the interim government might delay ongoing projects or halt future initiatives. This could restrict India's access to its northeastern states, which are connected to the rest of India through the narrow "Chicken's Neck" corridor.

Besides rail connectivity, there are five operational bus routes between India and Bangladesh, connecting major cities like Kolkata, Agartala, and Guwahati to Dhaka. The 2023 agreement to operationalize the use of Chittagong and Mongla ports was intended to ease cargo movement, but the current political uncertainty puts these plans at risk.

Political and Security Concerns

Counterterrorism and Regional Security

Sheikh Hasina's administration has been instrumental in maintaining regional security and counterterrorism efforts. Her government's cooperation in eliminating anti-India terrorist groups operating from Bangladeshi territory has been a cornerstone of bilateral security relations. The interim government's stance on security cooperation is yet to be seen, and any deviation from the established norms could introduce new security challenges for India.

Conclusion

The removal of Sheikh Hasina from power brings a period of uncertainty and potential disruption to India-Bangladesh relations. The strong bilateral ties, characterized by substantial trade, robust infrastructure projects, and collaborative security efforts, are at risk. The international community and stakeholders in both countries will closely monitor the developments in Bangladesh as the interim government and subsequent administrations navigate these challenges, as per the media report.

The future of India-Bangladesh relations will depend on the ability of both nations to maintain and build upon the foundations laid during Hasina's tenure. Ensuring continuity in economic, infrastructural, and security cooperation will be crucial for sustaining the mutually beneficial relationship between the two neighbouring countries.