Bangladesh cancels $21 million defence deal with Indian shipyard GRSE

Bangladesh has cancelled a $21 million deal with India’s GRSE for an ocean-going tug amid strained ties. The contract was part of a $500M defence credit line, marking a setback in India-Bangladesh military cooperation. 

New Delhi: In a setback to India-Bangladesh defence cooperation, Bangladesh has cancelled a $21 million (approx. ₹180 crore) contract awarded to Kolkata-based Garden Reach Shipbuilders & Engineers (GRSE). The deal, signed last year, involved the design, construction, and delivery of an 800-tonne, 61-metre-long advanced ocean-going tug within 24 months.

The contract was the first significant agreement under the $500 million defence line of credit extended by India to Bangladesh, which came into effect in 2023. The tug was intended for the Bangladesh Navy and was to have a top speed of at least 13 knots under full load.

The agreement was signed in Dhaka in July 2023, coinciding with a visit by Indian Navy Chief Admiral Dinesh K Tripathi, aimed at strengthening defence ties and expanding maritime cooperation between the two countries.

However, diplomatic relations have taken a downturn following the exit of then Bangladeshi Prime Minister Sheikh Hasina in August 2023. The political shift has strained bilateral ties and contributed to the cancellation of the project.

India has been steadily enhancing military cooperation with Bangladesh in recent years to counter growing Chinese influence in the region. Bangladesh had previously procured its first diesel-electric submarine from China, highlighting the strategic competition in South Asia.

Despite recent tensions, Army Chief General Upendra Dwivedi had emphasised earlier this year that India and Bangladesh remain strategically important partners, and fostering amicable relations is vital for both nations' interests.