This raises several questions which cannot be answered fully at this stage. For India, what would happen to existing schemes like SAARC or BIMSTEC, which was largely launched on a proposal from Dhaka?
In some ways, China’s decision to launch a new trilateral geopolitical realignment in South Asia along with Pakistan and Bangladesh, comes as a paradox. The timing has been perfect. Despite initial Chinese denials to the contrary, the prime intent of the new lineup is to isolate India, by disrupting its close ties with Bangladesh.
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Present indications suggest that China would set up an administrative structure for the proposed organisation to show it as a functional entity, preferably before the general elections are held in Bangladesh. Polling could take place anytime from April to June 2026.
India's political isolation in the region
This would make it difficult for Indian policymakers to work out an effective policy response until the outcome of the elections is known. Till then, India would find itself without reliable political allies, missing the assured support it received in the region earlier from Bangladesh. Preliminary talks with Nepal, Bhutan and Sri Lanka would not be of much help. Besides there are indications that as the new development-oriented group begins its work it might ask the smaller countries to come on board.
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In fact, Indian policymakers may have to contend with a longer spell of political isolation in a region it once dominated, depending on whether the currently banned Awami League (AL) can stage a political revival. As of now, with strongly Islamist elements ruling Bangladesh, chances of secular (pro-Indian) forces staging a comeback in the short term are none too bright.
There is little doubt among experts that the West-sponsored regime change in Bangladesh was an essential first step of a long-planned major territorial reset in the region. The head of the new interim government in Bangladesh, Dr. Muhammad Yunus, declared this gloatingly at a meeting during a visit the US.
However, 11 months later, even before the US administration could finally secure a firm foothold by taking charge of the St. Martin island from Bangladesh it is China that has outmanoeuvred the West by proposing its creative trilateral developmental initiative. Paradoxically, the ‘catalytic agent’ for both camps (Pro-China and Pro-US) is none other than the underestimated, much-maligned figure for the nationalistic Indian media – Dr. Yunus!
Vitriolic hostility towards India
The Chief Administrator to the interim Bangladesh government also met top Chinese leaders in Beijing, where the new grouping was thoroughly discussed.
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A sure sign of the changing times from an Indian standpoint is the increasing vitriolic hostility from the mass media in Pakistan, Bangladesh and some Western publications, targeting Delhi. Most Indian moves and its response to regional developments are described as ‘hegemonic’ by smaller neighbours like Nepal, Pakistan and nowadays, even Bangladesh! But India has much more to worry about than hostile semantic aggression by its neighbours.
Interestingly, the authoritative Global Times of China has been providing major details of the new economic grouping, suggesting that Chinese authorities had been discussing their plans with Pakistan and Bangladesh for some time, keeping out India.
Chinese experts have categorically declared that China's economy is five bigger than India’s. As with Indo-Bangladesh trade, which leaves a very heavy negative balance for Bangladesh, so it is in Indo-China trade. India’s exports to China are minuscule, while Chinese exports earn much more!
India's efforts to avoid buying from China in recent times have not succeeded either. Its dependence on China in pharmaceuticals, renewable energy, electronics and other sectors is almost total. It may take India decades to catch up with China.
China's help to Bangladesh
China's investments/financial help to Bangladesh have exceeded $25 billion so far. China has helped Bangladesh majorly in building its massive new Padma bridge, to give only one example. Bangladesh and Nepal have benefited from the BRI (Belt and Roads Initiative) of China in the transport sector, whereas India has stayed out, citing political concerns.
The problem with India, according to Chinese commentators, is that it cannot really help its neighbours in a major way, being neither technologically advanced nor economically affluent. Yet it insists on claiming to be equal to China, a claim Beijing will always challenge.
The new grouping, to be set up after long deliberations among the participating countries in recent years would focus on targeted growth in South Asia. It would help expand infra sector construction, set up new industries, make investments in joint sector, schemes, increase power generation, tourism and the arms trade, with China supplying quality weaponry at most competitive prices. The projects would be implemented mainly with Chinese finance and expertise, with comfortable long-term loans for the smaller partners.
In other words, the arrangement would not be very different from what the Chinese had proposed for the China-Pakistan Economic Corridor (CPEC) project in Pakistan. There would be a spirit of total trust and mutual respect among participants.
What will happen to SAARC?
This raises several questions which cannot be answered fully at this stage. For India, what would happen to existing schemes like SAARC or BIMSTEC, which was largely launched on a proposal from Dhaka? Some connectivity projects for roads and highways, expansion of railways, construction of bridges etc have been completed. At least six railway expansion projects are under construction. For Bangladesh, opportunities for medical tourism and higher education in India at relatively low cost have been very helpful.
However, now work has stalled on most projects after the ouster of the AL from power. The road/rail connectivity worked out after years of discussion and hard work are also suffering on account of political tensions between Dhaka and Delhi. Both the BIMSTEC schemes and the flourishing border trade between the two countries have been hit hard.
It remains for Delhi to figure out whether to go ahead with its existing joint venture schemes in Bangladesh. Both sides have already introduced new restrictions on the border trade and cargo movements, so the signs are not encouraging.
The new Pakistan-China initiative should negatively impact existing multinational entities like the SAARC and the BIMSTEC. Clearly India’s financial or organisational help to develop Bangladesh or Nepal in terms of scale cannot compare with what China can offer – this is the conclusion of most experts.
India's investments in Bangladesh
So far, India has invested around $8 billion in Bangladesh in infra development projects, including construction of railways, bridges, power supply networks. It exported over $1.10 billion worth of goods to Bangladesh in 2024 whereas it imported goods worth $9.73 million from its neighbour.
Since August 2024, as the AL was thrown out of power, work on six major railway projects has been affected. As bilateral relations deteriorated Bangladeshis were receiving fewer Indian visas for patients. The cost of exporting garments and other items has risen sharply. Bangladesh can now use the facilities of only the ports of Mumbai and Kolkata, which leads to delays and rising costs.
But influential circles in Bangladesh and Nepal do not view the present situation negatively.
Unlike India, its neighbours have participated in BRI to develop their infrastructure. Bangladesh is also keen to ensure better river traffic systems as well as more effective naval development schemes in the Bay of Bengal. In fact Dhaka had invited China to be the dominant power in the Bay, with its coastal belt and adjacent regions again leaving India out. It also proposed working agreements for better coordination with China in the functioning of major ports like Chittagong and Mongla. in the region.
Further, as a flood-prone country, Dhaka would seek technical help as well as soft loans from China directly. Under the interim government, China would help Bangladesh by preparing long-term solutions. China had done this in the Teesta River project, a permanent sore point in Indo-Bangladesh relations.
As for SAARC, it hardly ever functioned!
China would like India, Bhutan and Nepal to join the proposed organisation. Having opposed China’s BRI schemes earlier, India cannot be expected to change its stance.
For the moment, India has little choice other than what it is doing for now – adopting a wait-and-watch option.
(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal)
