Why India Must Step Up in Bangladesh—and Why It’s Time for a New India-China Compact in South Asia

By Sushant Pawar

For decades, South Asia has been a region caught between hope and hostility, brotherhood and betrayal, growth and governance failures. At the centre of this whirlpool lie its most critical actors, India, China, and their immediate neighbours, especially Bangladesh and Pakistan. The global gaze often falls upon these countries through a narrow lens: a simmering India-China rivalry, Pakistan’s instability, and Bangladesh’s turbulent yet remarkable economic rise. But that lens has become inadequate.

What we’re seeing now is a region reshaping itself, not only through development but also through diplomacy, debt, and shifting strategic loyalties. Amidst all this, China has quietly, yet unmistakably, expanded its influence in Bangladesh. India, despite its geographical proximity and historical intimacy with Dhaka, seems to be reacting instead of proactively engaging. The stakes are no longer just bilateral. They touch on issues of connectivity, energy security, political stability, and the ideological future of the Indian subcontinent.

The Bangladesh of 2025

Bangladesh is a paradox in motion. On one hand, it has achieved economic growth that few thought possible three decades ago, driven by its garment industry, remittances, and sound macroeconomic decisions. Its graduation from LDC (Least Developed Country) status is pending, and its social indicators—from life expectancy to women’s empowerment, outpace even India in some respects.

Yet, underneath this success story is a rising tide of political instability. Sheikh Hasina’s Awami League government, once credited with stamping out radical Islamist groups and nurturing economic growth, is now under criticism for authoritarian tendencies, media suppression, and institutional erosion. The January 2024 elections, marked by boycotts and low voter turnout, only deepened the legitimacy crisis.

This is where China has stepped in, quietly but assuredly. Over the past few years, China has poured billions into Bangladesh’s infrastructure, from the Padma Bridge Rail Link to deep-sea ports like Payra. It is also Bangladesh’s biggest trading partner and defence supplier. Dhaka’s flirtation with Beijing is not accidental, it is calculated, and in some ways, logical. Unlike Western partners or even India, China does not condition loans or aid on democratic norms or human rights. It offers speed, capital, and geopolitical cover.

But this raises an unsettling question for India: is Dhaka slowly slipping away?

Not Losing a Friend, but Failing a Relationship

India’s relationship with Bangladesh is not transactional, it is civilizational. In 1971, it was India that gave sanctuary to millions of refugees and provided military support that helped birth a new nation. That legacy still runs deep in Dhaka, even if it is not always loudly acknowledged. But nostalgia is no strategy.

Despite cultural closeness, India’s diplomatic approach toward Bangladesh in recent years has been marked by complacency. Yes, there are agreements on power sharing, water cooperation, and border management. Yet the elephant in the room remains unresolved: the Teesta water-sharing issue, languishing for over a decade due to political wrangling within India itself, particularly with the West Bengal state government. For Bangladesh, this is not just a water issue, it’s symbolic of India’s inability to deliver.

Meanwhile, China has no such delays. It doesn’t have to navigate federal-state politics or media criticism. It signs, delivers, and sometimes over-delivers. Even if Chinese loans are costlier or opaque, the speed and scale matter more to a country like Bangladesh, desperate to maintain its growth momentum amid global headwinds.

The Subtle Power of Infrastructure

The phrase "infrastructure is strategy" has become something of a cliché in foreign policy circles. But in the context of China’s presence in Bangladesh, it is a living reality. Consider the Karnaphuli Tunnel in Chittagong—South Asia’s first under-river tunnel, financed and built by China. Or the special economic zones in places like Anwara and Araihazar, where Chinese firms are being given exclusive operational rights.

These aren’t just economic projects. They are beachheads of influence. They create long-term dependencies, shift supply chains, and embed Chinese interests in critical nodes of Bangladesh’s economy. In short, they allow Beijing to shape not just what Bangladesh builds, but what it imagines for its own future.

India’s counter has been mild. The Line of Credit (LoC) agreements with Bangladesh have seen delays and underutilisation. Even when Indian businesses attempt to invest in Bangladesh, they often get outpaced by faster Chinese firms or mired in local regulatory uncertainties.

To put it bluntly: India is losing the development diplomacy game, not because it lacks capacity, but because it lacks clarity and speed.

The Risk of a Regional Chain Reaction

The more Bangladesh leans toward China, the more the strategic map of South Asia begins to shift. It’s not just about one country. It’s about a regional arc—from Myanmar to the Maldives, where Chinese infrastructure and influence are increasingly taking root. The “String of Pearls” theory, once dismissed as a paranoia-driven construct, is slowly becoming real.

If Beijing can pull Bangladesh closer into its orbit, militarily, economically, and ideologically—it doesn’t just gain an ally. It gains a platform to check India in its own backyard. With Pakistan already aligned with China through CPEC, a Bangladesh tilted toward Beijing would allow China to exert pressure on India from both flanks, north and east. That’s a future India cannot afford to be indifferent to.

But here’s the twist: perhaps neither can China.

Rethinking the India-China Binary

For too long, India and China have seen each other as rivals rather than partners. This mindset, shaped by the 1962 war, border disputes, and divergent global alignments, has created a zero-sum perception in both countries’ strategic thinking. But the 21st century doesn’t need to be a repeat of the Cold War logic.

In truth, India and China stand to gain enormously by cooperating rather than competing in regions like South Asia. Their economies are complementary in several sectors, especially in manufacturing, green energy, digital infrastructure, and AI. A coordinated approach toward stabilising Bangladesh, for instance, would benefit both. China would gain a more reliable economic partner, and India would avoid strategic encirclement.

This is not naïve idealism. There are precedents. In Afghanistan, despite conflicting interests, both countries cooperated modestly on development projects. In BRICS, they have sat on the same table and found alignment on many global governance issues.

Why then, must Bangladesh—or any South Asian country, be reduced to a pawn in a rivalry? Couldn’t it be the very ground where a new India-China understanding is shaped?

This doesn’t mean India should abandon its concerns about Chinese hegemony or military intentions. Nor should it compromise on sovereignty issues like Aksai Chin or Arunachal Pradesh. But it does mean that rivalry need not be the default setting. Pragmatism can be more productive than paranoia.

What India Must Do

India must not wait for an existential crisis in Bangladesh to act. The window for meaningful re-engagement is still open, but narrowing.

First, India must untangle the Teesta issue. This will require not just central diplomatic finesse, but intense coordination with West Bengal's state leadership. Prime Minister Narendra Modi must treat this as a national priority, not a regional inconvenience. For Dhaka, action on Teesta will be a powerful signal that India listens and delivers.

Second, India should revisit its development diplomacy model. Instead of spreading itself thin, it should focus on a few high-impact projects and ensure time-bound delivery. A good candidate would be joint power grid expansion and the India-Bangladesh-Nepal-Bhutan energy corridor, a game changer for regional integration.

Third, India needs to open its market further to Bangladeshi goods, especially RMG (ready-made garments). Trade asymmetry is a persistent irritant in bilateral ties. A more generous trade policy would not only win goodwill but also reduce Dhaka’s over-reliance on China.

Fourth, India must increase its soft power outreach. This includes expanding scholarships, cultural exchanges, and digital partnerships. Bangladesh’s youth are increasingly global in their aspirations. India should be their window to the world, not China.

Finally, India must signal that it sees Bangladesh not as a buffer state, but as a partner. The language of strategic patience must be replaced with strategic empathy. The idea of South Asia must once again be animated by shared civilisational values, not zero-sum alignments.

A Choice to Be Made.

Bangladesh stands today at a delicate intersection. It could drift toward deeper authoritarianism and dependency on China, or it could be re-anchored as a bridge of peace, prosperity, and partnership in South Asia. The choices its leaders make will matter. But so will India’s.

India has the means, the history, and the vision to reclaim its role, not as a hegemon, but as a leader. And China, for its part, might soon realise that building alliances on the back of fragile states or authoritarian regimes can only go so far.

The true contest in South Asia is not military. It is moral. It is developmental. It is about which power can provide a more inclusive and stable future. It’s time India stepped up. And maybe—just maybe—it’s also time India and China stopped playing chess, and started building something together.