India’s uneasy Balancing Act in the Bay of Bengal

Context: India has taken several strategic, infrastructural, and diplomatic steps to position itself as a regional integrator, particularly in the Bay of Bengal and broader South Asia. However, India risks undermining the idea of cooperative regionalism, if it begins to use trade access to signal political displeasure.

India’s strategic steps in the Bay of Bengal Region:

India has taken several strategic, infrastructural, and diplomatic steps in the Bay of Bengal and broader South Asia. They include: 

• India has invested heavily in port infrastructure through the Sagarmala programme to improve coastal logistics and connectivity.
  • India's port infrastructure remains the most extensive and efficient in the region. Cargo-handling capacity is expanding rapidly, and coastal shipping and multimodal linkages are more developed than those of any other BIMSTEC partner. 
  • Regional countries like Bangladesh rely on Indian gateways for faster, cheaper access to global markets. Alternatives via Sri Lanka or Southeast Asia are costlier and less time efficient. 
• Policy changes such as Goods and Services Tax (GST) cuts on bunker fuel and incentives for coastal shipping have doubled the cargo movement on the east coast in a decade. 
• At the regional level, India is pushing for better integration through BIMSTEC. India has signed the BIMSTEC Maritime Transport Cooperation Agreement to harmonise customs procedures and foster multimodal linkages, with the broader goal of reducing the cost and friction of trade within the Bay. 
• Through Act East and Neighbourhood first policy, India emphasis on building connectivity with ASEAN and South Asian neighbours, especially through the Northeast.

These steps aim to improve connectivity, economic ties, and trust among its neighbours. 

Concerns about India's credibility as a regional trade facilitator

• India recently withdrew a key transshipment facility granted to Bangladesh. India cited misuse of the facility and regulatory concerns as reasons for the withdrawal. 
• This move, coupled with restrictions on Bangladeshi imports of some goods via land routes, has raised concerns about India's credibility as a regional trade facilitator in the Bay of Bengal.

Geopolitical Implications

Infrastructure alone does not confer leadership. In a fragmented region like the Bay of Bengal, credibility matters as much as capacity.

• Erosion of Trust: If India’s neighbours see trade routes being weaponised for political signaling, they will start hedging- possibly turning more towards China or Southeast Asia.
• Impact on Regional Leadership: India wants to be the economic and connectivity hub of the Bay of Bengal, but leadership requires predictable and rule-based behaviour.
• Signal to smaller BIMSTEC Members: Countries like Nepal, Bhutan, Myanmar, and Sri Lanka may begin to doubt India’s commitment to neutral, cooperative regionalism.

Bay of Bengal is at an Inflection Point: 

• On one level, it is a zone of opportunity. With improved connectivity, it could emerge as a self-sustaining corridor between South and Southeast Asia.
• On another level, the region remains vulnerable to strategic anxieties. 

The line between economic policy and geopolitical preference is beginning to blur. 

Way Forward

• Clarify Policy: Clearly state the reasons for suspending Bangladesh’s transshipment facility and the conditions for its restoration.
• Rules-Based Mechanism: Establish transparent trade and transit rules to prevent political disruptions from affecting economic cooperation.
• Strengthen BIMSTEC: Use BIMSTEC to institutionalise regional trade norms, customs coordination, and dispute resolution.
• Credibility over Coercion: Maintain policy consistency to reinforce India’s image as a dependable regional leader, not a reactive power.