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Dhaka, May 23, 2025 – Bangladesh has canceled a $21 million (approximately ₹180 crore) defense contract with Kolkata-based Garden Reach Shipbuilders & Engineers Limited (GRSE), a company under India’s Ministry of Defence.
The deal, signed in July 2024, involved the procurement of an 800-ton ocean-going tugboat for the Bangladesh Navy and was part of a $500 million Line of Credit (LoC) agreement between Dhaka and New Delhi in 2023. This tugboat was considered the first major project under the LoC.
The cancellation was first reported by Indian online portal Firstpost and covered by multiple leading Indian media outlets, including India Today and NDTV. According to NDTV, GRSE informed the Indian stock market of the cancellation, stating that the Bangladesh government had officially withdrawn the order. The decision is expected to cause significant financial losses for GRSE.
The move comes amid escalating diplomatic tensions between Bangladesh and India. Analysts suggest the cancellation is a retaliatory step following India’s recent imposition of restrictions on the transportation of Bangladeshi goods, including ready-made garments, through its land ports. This followed Bangladesh’s decision to limit cotton imports from India via land routes, prompted by India’s abrupt suspension of transshipment facilities for Bangladesh.
The decision has been linked to recent statements by Bangladesh’s Chief Adviser, Dr. Muhammad Yunus, who referred to India’s northeastern “Seven Sisters” region as “landlocked” and described Bangladesh as the “sole guardian” of maritime access for the region. Yunus also proposed strengthening trade ties with China, which reportedly prompted India’s land port restrictions. Indian media outlet The Hindu Business Line noted that the cancellation followed mutual discussions between the Bangladesh government and GRSE, though details of these talks remain undisclosed.
Since 2015, India has extended $8 billion in LoC support to Bangladesh for infrastructure development, primarily during the tenure of former Prime Minister Sheikh Hasina. The cancellation of the GRSE deal is seen by diplomatic analysts as a reflection of strained bilateral relations, particularly following Hasina’s ouster. The decision’s impact on future defense cooperation and economic ties between the two nations remains a key point of focus.
AI/MR
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