India’s uneasy balancing act in the Bay of Bengal, Pg6

Key Highlights

• India’s maritime trade in the Bay of Bengal is rising; cargo volumes are up in key eastern ports.
• India withdrew the transshipment facility granted to Bangladesh in April 2025, raising diplomatic tensions.
• The move followed Bangladesh’s pro-China remarks and its portrayal as a maritime gateway for India’s northeast.
• India also restricted imports from Bangladesh through land ports in the northeast.
• This shift, driven by political concerns, risks damaging India’s image as a reliable regional integrator.
• Maritime trade corridors in the Bay are becoming transactional, not cooperative.
• India needs to balance strategic interests with regional trust-building for long-term leadership.

Detailed Insights: 

1. India’s Maritime Rise in the East

• Trade volumes at eastern ports (Visakhapatnam, Paradip, Haldia) have risen steadily.
• Sagarmala programme and GST cuts on bunker fuel have improved logistics and coastal shipping.
• BIMSTEC Maritime Transport Cooperation Agreement (2024) aims to harmonize customs and reduce trade friction.

2. Transshipment Row with Bangladesh

• India revoked Bangladesh’s transshipment privilege (which allowed it to use Indian ports for third-country exports).
• Official reason: Port congestion, but Dhaka sees it as retaliation for pro-China stance. 

3. Retaliatory Trade Measures

• India further restricted imports from Bangladesh via northeast land ports (garments, food, plastics).
• Imports now allowed only through sea ports like Kolkata and Nhava Sheva, increasing costs and delays.

4. Impact on BIMSTEC and Regional Trust

• The transshipment rollback contradicts India’s regionalism goals and BIMSTEC commitments.
• Smaller countries may now view Indian infrastructure as politically conditional, not neutral.
• The BIMSTEC Free Trade Agreement, if revived, could help integrate the region — but India’s credibility is now in question.

5. Strategic Risks and Regional Perception

• Bangladesh’s growing ties with China and Pakistan are strategic hedges. 
• India’s reactive posture could alienate partners like Myanmar, Sri Lanka, Thailand, etc.
• Maritime corridors, once cooperative zones, are turning geopolitically sensitive.

Way Forward: 

• Restore Regional Trust: Resume dialogue with Bangladesh and other Bay of Bengal states to rebuild confidence and avoid the perception of politically motivated trade restrictions. 
• Depoliticize Trade Corridors: Ensure maritime and land trade routes remain open and rules-based, minimizing unilateral restrictions to uphold India’s image as a reliable regional partner. 
• Balance Strategic & Economic Goals: Pursue strategic interests without undermining economic cooperation—avoid excessive transactionalism in regional ties. 
• Promote Blue Economy & Sustainability: Collaborate on sustainable fisheries, marine resources, and environmental protection to secure livelihoods and regional goodwill. 

Key Concepts Involved: 

• Transshipment: Shipping goods through a third-country port to reach final destinations.
• Multimodal Linkages: Integrated logistics using rail, road, and sea to transport cargo.
• Strategic Hedging: Smaller states maintaining ties with multiple powers to balance risk.
• Rules-based Trade Frameworks: Systems that prevent political interference in trade access.

Mains Practice Question:

India's regional leadership in the Bay of Bengal depends on both capacity and credibility. Critically examine in the context of its recent trade decisions with Bangladesh.