[Answered] India’s uneasy balancing act in the Bay of Bengal risks undermining cooperative regionalism by using trade for political displeasure. Analyze its implications for India’s foreign policy goals and regional stability.

Introduction

India’s recalibration of trade access to Bangladesh in the Bay of Bengal signals strategic assertion, but such economic politicization could erode regional trust and derail its broader goals of cooperative regionalism.

India’s Maritime Strategy and Recent Shifts

1. India’s Act East Policy, Sagarmala Project, and leadership in BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) underline its ambition to emerge as a regional integrator between South and Southeast Asia.
2. The BIMSTEC Maritime Transport Cooperation Agreement (2024) marked a milestone in promoting seamless trade and connectivity.
3. However, India’s revocation of Bangladesh’s transshipment facility in April 2024 and subsequent import restrictions have sparked diplomatic tensions.
4. Though officially justified on logistical grounds, the timing — soon after Dhaka’s overtures to China and assertions about being the Northeast’s maritime gateway — suggests political undertones.

Implications for India’s Foreign Policy Goals

1. Undermining Cooperative Regionalism: India has historically advocated for rules-based regionalism in South Asia and BIMSTEC. Politicization of trade threatens this narrative, making India’s leadership appear conditional rather than constructive.
2. Erosion of Strategic Trust: Bangladesh is a key partner in India’s regional outreach. It participates in BBIN, hosts connectivity corridors like the India-Bangladesh Protocol Route, and collaborates on security. Sudden trade restrictions create distrust, encouraging Dhaka to hedge with China or ASEAN, weakening India’s strategic leverage.
3. Impact on BIMSTEC Credibility: If India, as the largest economy in BIMSTEC, uses its infrastructure as leverage, smaller states like Nepal, Bhutan, and Myanmar may question the neutrality of BIMSTEC’s framework. It could mirror the dysfunction of SAARC.
4. Loss of Moral High Ground Against China: India criticizes China’s “debt diplomacy” and strategic coercion under the Belt and Road Initiative (BRI). If India uses trade as a geopolitical tool, it risks mirroring the very behavior it opposes, diminishing its soft power.

Implications for Regional Stability

1. Strategic Churn in the Bay of Bengal: The Bay is witnessing heightened geopolitical interest, with China investing in Kyaukphyu (Myanmar) and Payra (Bangladesh) ports. If India’s actions are perceived as coercive, regional states may welcome China’s investments more readily, increasing external influence.
2. Trade Disruptions and Economic Fallout: Bangladesh’s ready-made garment sector (85% of its exports) faces higher costs due to the closure of Indian routes. Such economic fallout in fragile economies can fuel domestic unrest, indirectly affecting India’s border stability and refugee management.
3. Fragmentation of Regional Supply Chains: The Indo-Pacific strategy hinges on building resilient supply chains. Creating uncertainty around logistics corridors undermines the effort to decouple from China and regionalize production.

Way Forward

1. Rules-Based Trade Mechanism: India must institutionalize a transparent and apolitical framework for trade facilitation in the region, restoring credibility.
2. Economic Statecraft with Responsibility: Use economic tools to build interdependence, not impose costs. Strategic interests must be pursued through dialogue, not denial.
3. Leverage Soft Power and Infrastructure Together: With superior port infrastructure and connectivity, India should lead by example, offering access as a regional public good.

Conclusion

India’s credibility as a regional leader rests on trust and predictability. Weaponizing trade jeopardizes regional stability and dilutes cooperative regionalism, undermining its long-term strategic and diplomatic aspirations.