Bangladesh Cancels $21 Million Defence Deal With India’s GRSE Amid Deteriorating Bilateral Ties
Bangladesh has officially cancelled a $21 million defence agreement with India’s state-owned Garden Reach Shipbuilders and Engineers Ltd (GRSE), originally signed for the construction of a modern ocean-going tugboat for the Bangladesh Navy, according to a report by Hindustan Times.
The contract was the first significant deal under India’s $500 million line of credit for defence purchases, signed in July 2024—just a month before the ouster of former Prime Minister Sheikh Hasina. GRSE disclosed the cancellation in a filing to the National Stock Exchange, attributing the termination to a directive from the Government of Bangladesh.
“In terms of Regulation 30 and other applicable provisions of the SEBI Listing Regulations, we wish to inform you that the Government of the People’s Republic of Bangladesh has cancelled the order,” the company said in its regulatory statement.
This move comes amid rapidly worsening relations between the two South Asian neighbours. Earlier this month, India restricted the import of Bangladeshi consumer goods through 11 northeastern land ports. In April, India withdrew a key transit facility that had enabled Bangladeshi exports to reach third countries via Indian airports and seaports. Bangladesh responded by halting yarn imports from India through land ports starting April 13.
Economic ties between the two nations are also under pressure. In FY24, Bangladesh was India’s largest trading partner in the region, with India exporting goods worth $11.06 billion and importing goods valued at $1.8 billion. Additionally, India was Bangladesh’s second-largest export destination, absorbing 12% of its total exports.
Political developments in Bangladesh have further complicated matters. The country’s interim government recently banned the activities of the Awami League—former PM Sheikh Hasina’s party—under the Anti-Terrorism Act, citing threats to national security.
Most recently, India imposed restrictions on the import of Bangladeshi ready-made garments, limiting access to select ports. The move affects an estimated $700 million worth of annual exports from Bangladesh.
The cancellation of the defence deal appears to be a key indicator of the growing mistrust and friction shaping Indo-Bangladeshi relations.
