India is approaching Bangladesh’s new caretaker government with caution. Since Nobel laureate Muhammad Yunus took over as Chief Advisor in August 2024, Indian Prime Minister Narendra Modi has not held extended talks with him. Their only interaction was a short meeting on the sidelines of a regional summit in April. While India has stated support for Bangladesh’s democratic process, behind the scenes, Indian officials are reportedly less happy, critical of “mischievous” and “politically motivated” messages from the Bangladeshi side about the Modi-Yunus meeting.
This diplomatic chill reflects deeper uncertainty. Sheikh Hasina, Bangladesh’s former prime minister ousted after mass protests and international criticism last year, had long been seen as New Delhi’s most dependable ally in South Asia. Her government’s close ties with India created a predictable regional dynamic. Now, under Yunus’s leadership, Bangladesh appears to be broadening its foreign policy approach in a direction that reduces India’s privileged access.
Yunus’s state visit to Beijing underscored this evolving orientation. He praised China’s role in regional development and positioned Bangladesh as a potential “maritime gateway” to India’s northeastern states. While his remarks were framed in terms of economic opportunity, the message had obvious strategic weight. China responded with enthusiasm, pledging more than $1 billion in investment and signing agreements on infrastructure, cross-border river data-sharing, and even military cooperation.
Dhaka’s new posture is not a wholesale shift into Beijing’s orbit. Rather, it reflects a desire to avoid overdependence on any one power. In contrast to India and the West, China promotes infrastructure deals without attaching political conditions related to governance or democracy. This approach has made it an attractive partner for transitional governments trying to stabilise quickly without external interference.
Yet this balancing act is not without challenges. From India’s point of view, Bangladesh’s diplomatic shift raises both strategic and domestic concerns. Losing the close working relationship enjoyed under Hasina risks undermining India’s position in its own neighbourhood. This has wider implications for New Delhi’s Act East policy and its efforts to counterbalance China’s growing influence across South Asia.
India also faces an image problem in Bangladesh. Anti-India sentiment among the Bangladeshi public has deepened due to unresolved water-sharing issues, frequent border clashes, and a perception of political meddling. Concerns have recently emerged over India’s restrictive visa policies, which have hindered travel and exchanges between citizens of both countries. Bangladeshi officials have warned that these barriers are damaging long-standing people-to-people ties.
Adding to tensions, India recently terminated cargo trans-shipment facilities through its territory to Bangladesh. The move is seen as a direct response to Yunus’s comment in China that described India’s northeast as “landlocked” and dependent on Bangladesh for access. Indian officials viewed the remark as provocative and insensitive.
Overreliance on Chinese capital could result in long-term debt dependency, and deeper military ties may complicate Bangladesh’s traditionally neutral posture.
India may need to shift both its messaging and its strategy to turn relations around. Rather than acting as a dominant power in the region, India could present itself as a respectful and constructive partner. That could mean resolving water-sharing disagreements, scaling up joint infrastructure projects, and loosening visa restrictions to rebuild trust at the grassroots level.
There is still space to do this. The brief Modi-Yunus interaction at the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit may have been informal, but it created an opening for further diplomacy. By embracing this opportunity with humility and flexibility, India can avoid pushing Bangladesh further into China’s embrace.
At the same time, Bangladesh must tread carefully. While China offers major infrastructure investment and economic leverage, it also brings risks. Overreliance on Chinese capital could result in long-term debt dependency, and deeper military ties may complicate Bangladesh’s traditionally neutral posture.
Another variable is the upcoming election in Bangladesh, expected to take place in late 2025 or early 2026. If conducted fairly, it could produce a more stable and legitimate government capable of sustaining Bangladesh’s new foreign policy direction. A free and credible electoral process will also increase the confidence of international partners, including India and Australia, that Bangladesh remains a stable and democratic actor in the Indo-Pacific.
Ultimately, what’s happening in Dhaka is not about choosing sides – it is about expanding options. Bangladesh is not breaking away from past partnerships but instead asserting its right to navigate a complex and shifting geopolitical landscape. For regional powers such as India, China, and Australia, the challenge is to recognize this shift and engage accordingly.
Bangladesh wants to be seen not as a pawn in a larger game but as a strategic player in its own right. That means acknowledging its agency and listening more closely to its priorities. For Australia and other countries focused on Indo-Pacific security and connectivity, this is the moment to deepen engagement with Dhaka on terms that respect its sovereignty and growing ambition.
