Bangladesh cancels $21m defence deal with India as tensions escalate

The government of Bangladesh has cancelled a $21 million contract with India’s state-owned Garden Reach Shipbuilders and Engineers Ltd (GRSE) for the construction of an advanced ocean-going tug, according to a report by The Hindu.

The contract, awarded in July 2024, was officially terminated as disclosed by GRSE in a regulatory filing to the National Stock Exchange of India Ltd and BSE Ltd under India’s securities regulations.

GRSE, which operates under the Indian Ministry of Defence, confirmed the cancellation in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The cancellation comes amid heightened diplomatic sensitivities between the two neighbouring countries. It follows India’s recent decision to withdraw a transshipment facility previously granted to Bangladesh for exporting cargo to third countries.

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Analysts view these moves as indicative of growing strain in bilateral ties, particularly following a shift in political leadership in Dhaka after Prime Minister Sheikh Hasina's departure from office in August 2024.

Tensions between Bangladesh and India have reportedly intensified in recent months, with geopolitical analysts monitoring several developments that suggest cooling relations.

Despite the contract cancellation, GRSE reported progress on the domestic front.

The defence PSU announced that it had emerged as the lowest bidder for the construction of Next Generation Corvettes (NGC) for the Indian Navy, signaling continued momentum in its shipbuilding operations within India.