The recent downfall of Sheikh Hasina’s government in Dhaka has introduced significant uncertainties in the region, necessitating an urgent Indo-U.S. joint strategy to counter the expanding influence of China. With Bangladesh potentially slipping into China’s orbit, the geopolitical dynamics of South Asia are poised for a major shift.
Foreign policy experts emphasize the need for India and the United States to recalibrate their approach toward Bangladesh, a nation that appears to be gravitating towards China and Pakistan. This shift could pose a severe security threat in South Asia. The allegations by the outgoing Prime Minister, Hasina, accusing the U.S. of meddling in Bangladesh’s political stability, suggest that India can no longer afford to operate in isolation. With Khaleda Zia likely to head the new government in Dhaka—known for her anti-India stance—India’s singular focus on Hasina’s regime has backfired, leaving New Delhi vulnerable to an administration dominated by hardliners intent on reversing Hasina’s pro-India policies.
For China and Pakistan, the emergence of an anti-India government in Bangladesh is a strategic victory. Therefore, the United States must avoid viewing Hasina’s ouster as an isolated success in its human rights advocacy, as it could inadvertently strengthen China’s foothold in the region. Instead, the U.S. should collaborate with India, now an emerging economic powerhouse, to develop a comprehensive strategy to counter China’s aggressive expansion in South Asia, where it has already made significant inroads in Maldives, Nepal, Myanmar, and Sri Lanka, alongside its traditional ally, Pakistan.
India’s “Neighbourhood First” policy requires a geo-political refurbishment to effectively counter China’s manoeuvres. China’s presence along the Line of Control (LOC) and its support for anti-India forces are clear indicators of its strategy to undermine India’s regional authority. While India has historically maintained an independent foreign policy—exemplified by its steadfast relations with Russia even amid United States’ sanctions—it cannot ignore the shifting allegiances of its neighbours. The United States, given its current close ties with India, remains a reliable partner in this geopolitical landscape.
Critics argue that India’s foreign policy, which has often placed “all eggs in one basket,” now requires a strategic transformation. China’s use of its Belt and Road Initiative (BRI) debt policy to entrench its influence, coupled with its support for anti-India forces, is evident in Bangladesh. India’s prior engagement exclusively with Hasina’s regime left little room for dialogue with the opposition, particularly Khaleda Zia’s Bangladesh Nationalist Party (BNP). This lack of engagement has had dire consequences now that Zia is poised to assume power, as it allows Pakistan’s ISI and China to gain unchecked influence. BNP is upset with India after it gave shelter to ousted leader Hasina hence there is dire need of respecting public sentiments in Bangladesh and taking judicious decision about the former PM.
The Uncertain Future of the Free Trade Agreement (FTA)
India will likely have to navigate a new regime in Bangladesh to address the future of the Free Trade Agreement (FTA), which is crucial for bilateral trade. In the fiscal year 2023-24, bilateral trade between Bangladesh and India reached $13 billion, with significant exports of cotton, petroleum products, and cereals from India. A World Bank working paper revealed that FTA discussions, initiated in October 2023, focused on reducing or eliminating customs duties on goods traded between the two nations, potentially boosting Bangladesh’s exports to India by up to 295% and India’s exports by 170%. However, these negotiations face uncertainty under Bangladesh’s interim government. Despite this, the new regime may have no choice but to continue FTA discussions, given the substantial economic benefits for the people of both countries.
Trade concerns have already surfaced, with Mohit Sharma from the Trade Promotion Council of India, expressing apprehensions about agricultural exports, including onions, rapeseed, wheat, soybeans, and animal feed, valued at over $1.8 billion. The political crisis has already disrupted $300 million in trade, with exports from India to Bangladesh being particularly affected. Daily exports from India, valued at $30 million, have been halted, with goods piling up at border customs points. It is imperative that Bangladesh’s interim government addresses these issues promptly to prevent further economic losses. Notably, the export of fish from Bangladesh to India, once 15 trucks daily, has dwindled to just one truck. Hundreds of trucks laden with goods from India remain stranded at customs, awaiting clearance.Experts agree that Mohammad Yunus, the head of the interim government, must prioritize these pressing trade issues.
Implications for Other SAARC Nations
India’s experience with other SAARC nations underscores the need for a more nuanced foreign policy. In Maldives, the rise of President Mohamed Muizzu, who campaigned on an anti-India platform, highlights the risks of India’s single-track support for former President Ibrahim Mohamed Solih. Muizzu’s request for the withdrawal of Indian military personnel and his overtures to China, which supported him during the election, have strained India-Maldives relations.
Similarly, in Nepal, India’s longstanding support for the Nepali Congress and its neglect of the Communists fostered anti-India sentiments. During my six-year posting in Nepal in the 1990s, I witnessed how the Chinese embassy cultivated relationships with Nepali politicians through covert financial inducements. This investment paid off when pro-China leaders assumed power, leading to actions like K.P. Sharma Oli’s controversial redrawing of Nepal’s map during his previous tenure as PM to include Indian territories. Presently, Oli now heads a coalition with the Nepali Congress on rotation basis, which may temper his anti-India stance, the episode underscores the consequences of India’s selective engagement.
In Sri Lanka, India’s arms-length approach towards the Rajapaksa brothers contributed to their animosity towards New Delhi. While India provided crucial support during Sri Lanka’s economic collapse, China kept itself at length which did not create a good impression amongst the people and leadership. China, however, has invested in Maldives on the development of the infrastructures which will be largely benefited from the current friendly regime. But none can deny the fact that India’s timely assistance has won it favour among the Sri Lankan people, a sentiment that China, despite its investments, has struggled to match.
In Myanmar, India has attempted to balance its relations with the military junta while maintaining ties with democratic forces led by Aung San Suu Kyi. However, the latter’s frustration with India’s cautious approach has left her and her supporters feeling abandoned.
In the final assessment, India and the United States must urgently develop a joint action plan to counter China’s growing influence in South Asia. This plan should include strengthening strategic partnerships, enhancing cooperation within the Quad, promoting alternative trade and infrastructure initiatives, expanding joint military operations, collaborating on technology, engaging in robust diplomacy, providing development aid, countering disinformation, and supporting sovereignty in Asia. Such a comprehensive strategy is essential to reduce China’s influence in SAARC countries and ensure a free, open Indo-Pacific.
(The writer is a strategic affairs columnist and political analyst based in Shimla.)
