Bangladesh Cancels ₹180 Crore Defence Deal with India Amid Diplomatic Tensions
May 23, 2025 | Dhaka/Kolkata — In a significant move that signals deteriorating diplomatic relations, Bangladesh has cancelled a ₹180 crore ($21 million) defence contract with India’s state-owned Garden Reach Shipbuilders & Engineers Ltd (GRSE), a Kolkata-based shipyard operating under the Ministry of Defence.
The contract, signed in July 2024, was part of the $500 million line of credit offered by India to Bangladesh for defence procurements. It involved the design, construction, and delivery of an 800-tonne ocean-going tug, capable of speeds of at least 13 knots, within a 24-month period.
GRSE formally disclosed the cancellation to the Indian stock exchange on Wednesday, stating:
“We wish to inform you that the Government of the People’s Republic of Bangladesh has cancelled the order.”
This tugboat deal was the first major defence agreement under the newly activated credit line and was considered a key step in strengthening military cooperation between the two nations. However, relations have soured significantly following political shifts in Bangladesh, particularly after the departure of long-time Prime Minister Sheikh Hasina in August last year.
India had been deepening defence and strategic ties with Bangladesh in recent years to counter China’s growing influence in the region. Bangladesh, notably, purchased its first diesel-electric submarines from China in the past decade, prompting India to expand its military outreach.
The cancellation is being interpreted by analysts as a diplomatic setback for New Delhi, especially as it attempts to maintain influence in South Asia amid rising geopolitical competition.
Muhammad Yunus Considering Resignation Amid Political Crisis
In a related development, Bangladesh’s interim Prime Minister, Nobel laureate Muhammad Yunus, is reportedly contemplating resignation due to the deepening political deadlock in the country.
According to National Citizen Party (CP) leader Nhid Islam, who spoke with BBC Bangla, Yunus feels increasingly unable to perform his duties due to the failure of political parties to reach a consensus.
“We have been hearing news of sir’s resignation since this morning. So I went to meet him… He said he is thinking about it. He feels that the situation is such that he cannot work,” Islam said.
Yunus, who took charge to lead the country through a transitional phase, is said to be disheartened by the current political impasse and mass protests. CP leaders have urged him to remain in office, citing the country’s need for stable leadership and a peaceful transition of power.
This political uncertainty comes amid growing unrest and strategic recalibrations, including the decision to cancel high-level defence deals, reflecting the broader turbulence in Bangladesh’s domestic and foreign affairs.
Highlights:
Bangladesh cancels ₹180 crore ($21 million) defence contract with India.
The deal was signed in July 2024 with Kolkata-based GRSE to build an 800-tonne ocean-going tug.
Contract was part of a $500 million line of credit from India for defence purchases.
GRSE formally notified the stock exchange of the cancellation.
Move comes amid deteriorating India-Bangladesh diplomatic ties.
Political change in Bangladesh, including ouster of PM Sheikh Hasina, seen as a key factor.
India had aimed to counter China’s influence through strengthened defence ties with Dhaka.
The Eastern Times
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