New Delhi:

The resumption of India-funded development projects in Bangladesh marks a crucial turning point in the two South Asian neighbours’ evolving relationship after months of uncertainty in the wake of the ouster of Prime Minister Sheikh Hasina in August 2024.

With an interim government now at the helm, Dhaka’s decision to restart stalled India-funded infrastructure, connectivity, and other development projects signals an attempt to restore normalcy in bilateral ties.

On Wednesday, officials from both India and Bangladesh started a two-day meeting in Dhaka aimed at resolving complexities and expediting the delayed projects. This is the first such meeting since the student-led uprising that led to the ouster of Hasina on August 5 last year, forcing her to take refuge in India.

The ouster of Hasina also saw the rise of extremist Islamist elements in Bangladesh’s political landscape leading to large-scale violence against religious minorities, particularly Hindus. India has been continuously voicing its concerns over these developments. However, in December last year, Foreign Secretary Vikram Misri visited Dhaka to participate in the annual India-Bangladesh foreign office consultations. It was the first high-level bilateral visit between the two countries after the interim government came to power in Bangladesh.

Three days later, an interim government was installed headed by Nobel laureate Muhammad Yunus as the Chief Adviser. In the wake of the regime change, work on all India-funded projects in Bangladesh got stalled with all Indian personnel involved in such projects returning home.

According to Salehuddin Ahmed, Finance Adviser in the interim government, projects under Indian lines of credit (LoCs) will continue. “As project implementation was delayed, many assumed we would shut those down,” The Daily Star quoted Ahmed as telling reporters after a meeting of the advisory committee on government purchase even as the meeting between the officials of India and Bangladesh progressed in Dhaka. “But that is not the case. It’s not possible.”

He further stated that it does not matter which government initiated these projects because they are necessary. "So, we have decided to continue them,” he said. The latest developments come close on the heels of Yunus’s comments earlier this week in an interview to a British media outlet that, for Bangladesh, there is no alternative to good relations with India. Yunus claimed Bangladesh’s ties with India are “very good” and “our relationship will always be very good”.

“There is no way Bangladesh-India relations cannot be good,” he said. “Our relations are close, our dependence on each other is so high and historically, politically, and economically we have such a close relationship, we cannot deviate from that.”

Yunus’s comments on ties with India came at a time when the main opposition Bangladesh Nationalist Party (BNP) is demanding holding of early parliamentary elections and close on the heels of the formation of a new political party called the Jatiyo Nagorik Party (National Citizens’ Party) by the leaders of last year’s mass uprising.

India, a key strategic partner, had invested heavily in Bangladesh’s economic growth under Hasina’s leadership. The restart of these projects will be a litmus test for how the new administration in Dhaka navigates its foreign policy amid shifting regional dynamics.

High-impact community development projects (HICDPs) constitute an active pillar of India’s development assistance. The Government of India has funded 77 HICDPs including the construction of student hostels, academic buildings, skill development and training institutions, cultural centres, and orphanages among others in Bangladesh and 16 more HICDPs are being implemented, with all 93 projects amounting to over $50 million.

Bangladesh is the largest development aid partner of India. India has extended three LoCs to Bangladesh in the last eight years amounting to around $8 billion for the development of infrastructure in various sectors including roads, railways, shipping and ports. In addition to the LoCs, the Government of India has also been providing grant assistance to Bangladesh for various infrastructure projects, including the construction of the Akhaura-Agartala rail link, the dredging of inland waterways in Bangladesh and the construction of the India-Bangladesh Friendship Pipeline.

It is in the light of all this that question arises as to whether resumption of India-funded projects signals that ties between New Delhi and Dhaka are finally on the mend after months of chill. According to K Yhome, Fellow at the Shillong-based Asian Confluence think tank, what one is getting to see is that the Bangladeshi leadership have come to recognise that, despite the massive political uprising, they have to maintain close ties with India if their country has to make progress.

“The past few months of disturbances have driven home the point to the Bangladeshi leadership that Bangladesh has no other choice but to maintain cordial ties with India,” Yhome told ETV Bharat.

It is worth mentioning here that Bangladesh is set to be elevated to the status of a developing country in January 2026. At the same time, India’s eastern neighbour is also targeting to be a $1-trillion economy by 2031. According to experts, it will be difficult for Bangladesh to meet these targets without the cooperation of India.

“There was a political divide within Bangladesh on how to maintain ties with India after New Delhi gave refuge to Hasina,” Yhome said. “Initially, given Hasina’s close ties with the Indian leadership, people in Bangladesh saw India as part of the problem.” However, he explained that despite sheltering Hasina, India maintained a low profile in the internal politics of Bangladesh.

“In a sense, New Delhi has not invited any massive anti-India sentiments by not taking any sides in the internal politics of Bangladesh,” he said. Yhome said that the people and leadership in Bangladesh have realised that the extradition of Hasina from India can be kept as a separate political issue. There are people-to-people, business-to-business and government-to-government ties between the two countries as well.

“Bangladesh is facing huge problems like unemployment and inflation,” Yhome said. “People have realised that if these problems are to be solved, India is the key. They need India to rebuild their economy.” He further stated that the Bangladeshi leadership have realised that if their country were to progress, the India-funded projects have to continue.

“That thinking has sunk in,” he said. “From India’s perspective, that is a positive development.” According to Bangladeshi academic and political observer Sharin Shajahan Naomi, the resumption of the India-funded projects is very practical and pro-people. “They (the Bangladeshi leadership) should realise that hostility with neighbours doesn’t bring any good result,” Naomi said.

While stating that this process should continue, she said that other outstanding problems like border skirmishes and issuance of visas by India to Bangladeshi nationals should be resolved. “It is the duty of the government to get rid of its populist anti-India label as it does not bode well for international relations,” Naomi said. “They should realise that India is not just another South Asian nation but is today a global power.”

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