Bangladesh axes $21 million naval deal with Indian shipbuilder

Bangladesh has officially cancelled a $21 million contract with India’s Garden Reach Shipbuilders & Engineers (GRSE) for the construction of an ocean-going tugboat for the Bangladeshi Navy.

The agreement, signed in 2024, marked the first major defence procurement under a $500 million line of credit offered by India to support Bangladesh’s military modernisation efforts, Caliber.Az reports per foreign media. 

The deal was seen as a milestone in defence cooperation between the two neighbours. 

However, diplomatic relations between New Delhi and Dhaka have cooled significantly in recent months. Tensions escalated following the departure of longtime Bangladeshi Prime Minister Sheikh Hasina in August 2024. Since the political transition, the new Bangladeshi administration has signalled a shift in foreign policy, moving to strengthen ties with China and Pakistan. Analysts say the cancellation reflects Dhaka's recalibration of its strategic alliances, raising concerns in India about the changing geopolitical landscape in South Asia.

By Naila Huseynova