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In a move that signals worsening ties between the two neighbors, Bangladesh has abruptly cancelled a $21 million defense contract with India’s state-owned shipbuilder GRSE, highlighting the deepening rift following a major political shift in Dhaka.
The cancellation marks a significant setback in India-Bangladesh defense cooperation and comes amid escalating trade restrictions and diplomatic tensions that could reshape regional dynamics.
Bangladesh cancelled the contract for an advanced ocean-going tugboat, the first major deal under India’s $500 million defense credit line signed in mid-2024.
GRSE publicly notified the Indian stock exchange that the Bangladesh government had decided to terminate the order.
Recent months have seen India restrict imports of Bangladeshi garments to select ports and bar other consumer goods through multiple land border posts.
Bangladesh was India’s largest South Asian trading partner in FY24, with bilateral trade exceeding $13 billion.
The political upheaval following Sheikh Hasina’s removal and the banning of her party’s activities under anti-terror laws have further strained relations.
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