Sheikh Hasina likely to seek India's economic support during 4-day visit

Bangladesh's growth story runs into global economic instability, expensive fuel and slowdown in textile orders

Bangladesh Prime Minister Sheikh Hasina may seek India's economic support during a four-day visit as her country faces myriad challenges after years of growth.

Bangladesh became a middle-income country in 2021, ahead of the 2026 deadline as its industry textiles and remittances from abroad boomed. The economic growth now appears uncertain, as global economic instability partly sparked by the Ukraine war sends energy and food prices soaring and prompts widespread protests in the country. The situation turned dire enough for Dhaka to seek a $4.5 billion loan from the International Monetary Fund (IMF) last month.

Indian government officials said they expect talks with their Bangladesh counterparts on economic assistance during Hasina’s visit September 5-8. "India has historically helped Bangladesh in its economic progress, and the current regime is known to be a friend of India. If the situation deteriorates, financial assistance can be provided through lines of credit, as had been given earlier to Sri Lanka," an official said.

High global oil prices have shrunk Bangladesh's foreign currency reserves and made other crucial imports prohibitive. Alongside, a slowdown in United States and European Union has led to order cancellations for the garment export industry, the country's largest organised sector.

Bangladesh is a rice-producing nation, but skyrocketing demand has made it the fifth-largest wheat importer in the world. Wheat scarcity in the global market forced Dhaka to make emergency requests to India earlier this year.

"After the ban on wheat [by India in May], Dhaka has repeatedly requested for wheat, most of which has been allowed to be exported to them, as per our assurances. Similar assistances which are non-financial in nature, will be discussed," said the Indian official.

Trade pact

Hasina approved discussions with India on a Comprehensive Economic Partnership Agreement (CEPA), which is expected to raise Bangladeshi exports to India two-fold and expand the country's GDP by 2 per cent. The talks are still in early stages but CEPA is expected be an important item on Hasina's agenda, sources said.

Bangladesh exports $1.9 billion worth of goods to India from where it imports $16.15 billion. It imported $4 billion worth of cotton, $1.2 billion worth of wheat and a similar amount of petroleum.

Hasina has pushed for the deal to allow this trade imbalance to rectify at least partially. A quick resolution on this front would allow her to answer her domestic critics who point to the country even importing $600 million of rice, mostly parboiled, as emblematic of India's overwhelming shadow on the country's economy, officials said.

'India first'

Hasina, who arrived in Delhi on Monday afternoon, is also expected to counter domestic critics that the ruling Awami League Party, which she leads, is increasingly veering towards China.

"As is evident in her speeches and interviews in the run up to the visit, the PM has reiterated that Bangladesh still gives primacy to India among allies, even though it may not be so easy to state in the geopolitical stage," a diplomatic source from Bangladesh said.

Hasina favors India owing to her strong links to this country where she had sought political asylum for six years till 1981, often under the guardianship of Indian leader Pranab Mukherjee, he added. She visited West Bengal in 2018 and 2019 to attend non-political events.

Hasina's last visit to New Delhi was in 2019, when she was the co-chair of the Indian Economic Summit of the World Economic Forum. The visit had seen the signing of seven agreements in diverse areas. "The latest visit would allow both nations to discuss the progress of these," another official said.

Hasina is accompanied by her Foreign Minister AK Abdul Momen, Commerce Minister Tipu Munshi, Railways Minister Mohammed Nurul Islam Sujan, Liberation War Minister A K M Mozammel Haq, and Economic Advisor to the PM Mashiur AKM Rahman.