Bangladesh’s Policy Change: A Warning Bell for India?

This question isn’t just rhetorical—it taps into the deep-rooted economic, geopolitical, and social ties between India and Bangladesh. The two countries share not just a border, but a history, vibrant trade relations, and growing interdependence. In fact, India-Bangladesh trade has become a cornerstone of regional economic cooperation, linking markets, industries, and supply chains across both nations.

Here’s a deeper explanation of why Bangladesh’s internal policy shift or economic challenges could have real consequences for India:

1. Bangladesh's Economic Challenges Could Spill Over

As Bangladesh prepares to graduate from the UN's Least Developed Country (LDC) status by 2026, it stands to lose several trade benefits:

• Duty-free export access to markets like the EU under the EBA scheme.

• WTO exemptions that currently allow export subsidies.

• Preferential treatment in global trade deals.

These changes could hurt Bangladesh’s exports, particularly its ready-made garments (RMG) sector, leading to job losses, economic slowdown, and potential unrest.

2. How This Affects India

Though it may seem like a domestic issue for Bangladesh, India could feel the ripple effects in several ways:

• Trade Disruption: India and Bangladesh share strong trade ties. A weakened Bangladeshi economy could reduce demand for Indian exports (like raw cotton, food, machinery).

• Border Impact: Economic distress could lead to increased migration across the India-Bangladesh border, especially into West Bengal and Assam.

• Security & Stability: Economic instability often leads to internal unrest, which may impact regional peace and security in India’s northeastern region.

• Geopolitical Influence: If India doesn’t offer support, other powers like China may step in, shifting the strategic balance in the neighborhood.

3. Strategic Opportunity for India

On the flip side, India could also see this as a chance to deepen regional leadership:

• Bilateral Trade: Support Bangladesh in transitioning into new trade agreements like CEPA (Comprehensive Economic Partnership Agreement).

• Joint Ventures: Collaborate on manufacturing, logistics, and IT services.

• Connectivity Projects: Strengthen road, rail, and river networks through BBIN, BIMSTEC, and Act East Policy initiatives.

Conclusion

Yes, Bangladesh’s economic loss could very well become India’s concern, not just economically but geopolitically. But it also offers India a chance to act as a stabilizing partner and regional leader by helping its neighbor navigate a critical economic shift.