Delhi Dhaka Need Reset Must Let Go Of Political Baggage

The so-called sonali adhyay, or golden phase of India-Bangladesh relations after 1971, appears to have receded. Trade integration, cross-border connectivity, energy interdependence, and the political economy of regional cooperation now face multiple constraints. Although Bangladesh continues to be one of India’s principal trade partners in South Asia, the trade relationship stands at a critical juncture, caught between the possibility of renewed cooperation and the risk of reversal.

While imports from India have declined, imports from China and Malaysia have reportedly increased in the post-Sheikh Hasina period. Energy cooperation illustrates the growing material interdependence between the two economies. India’s electricity exports to Bangladesh, the Maitree Super Thermal Power Plant, and the India-Bangladesh Friendship Pipeline have expanded cross-border energy flows and created a more institutionalised framework for infrastructure cooperation. Future collaboration may increasingly depend on renewable energy, grid modernisation, storage technologies, and market-based cross-border power trading. In this sense, energy cooperation is not simply a sectoral issue but a mechanism for building regional public goods. Trade diversion away from India is largely driven by the growing use of non-tariff measures (NTMs), including sudden land-port restrictions, the withdrawal of transshipment privileges, anti-dumping duties, and stringent testing or certification requirements. These regulatory barriers raise overall trade costs and disrupt supply chains, particularly for garments, food products, and production materials.

India-Bangladesh relations should not be held hostage to the question of Hasina’s stay in India. She, her father Bangabandhu Sheikh Mujibur Rahman, and her party played a historic role in Bangladesh’s nation-building, but the future of bilateral relations must be shaped by the interests of both societies. Second, both countries should allow a freer flow of goods and services across their borders. If trade retaliation continues to grow, friendship will weaken, and the two countries may remain neighbours without functioning as a true neighbourhood. Third, Bangladesh should not overlook the advantages of being located next to one of the world’s largest economies. A well-designed bilateral agreement could shift the relationship from a narrow goods-trade model toward a broader framework covering investment, services, standards harmonisation, digital trade, logistics facilitation, and regional value-chain development. For Bangladesh, such an agreement is especially relevant in light of its forthcoming graduation from least developed country status, which will gradually alter its preferential access to major external markets. For India, deeper economic integration with Bangladesh supports both its Neighbourhood First approach and its Act East orientation.

The current political flux does not imply an inevitable breakdown of economic cooperation. A durable reset will require both governments to rebuild trust through formal diplomatic channels, transparent communication, and mutually beneficial economic frameworks. Standing at this crucial turning point, the relationship requires a reset that moves beyond accumulated political baggage.

The writer is professor, Research and Information System for Developing Countries (RIS), New Delhi