{"id":153619,"date":"2025-09-19T04:53:15","date_gmt":"2025-09-19T04:53:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/153619\/"},"modified":"2025-09-19T04:53:15","modified_gmt":"2025-09-19T04:53:15","slug":"unwinding-indias-failed-economic-zone-in-bangladesh","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/153619\/","title":{"rendered":"Unwinding India’s failed economic zone in Bangladesh"},"content":{"rendered":"

When Prime Minister Narendra Modi visited Dhaka in June 2015, he sought to pave the way for an economic zone<\/a> specifically for Indian investors in Bangladesh. Then-Bangladeshi Prime Minister Sheikh Hasina agreed with the proposal and signed a joint declaration.<\/p>\n

Initially, Dhaka proposed potential sites in Mongla or Rampal, offering between 100\u2013300 acres. But by 2017, during Hasina\u2019s high-profile visit to New Delhi, the plan had expanded to more than 1,000 acres in Mirsarai, later reduced to about 900 acres, to be developed in cooperation with India\u2019s Adani Group.<\/p>\n

From the start, the location was sensitive. Mirsarai sits astride a narrow coastal corridor sometimes described as Bangladesh\u2019s own \u201cchicken neck\u201d<\/a>, connecting Chattogram, Cox\u2019s Bazar and the three hill districts. The area had also been eyed for naval infrastructure.<\/p>\n

When the Bangladesh Economic Zone Authority (BEZA) allocated land for a foreign-designated zone, it created the appearance of ceding de facto control over a strategic corridor.<\/p>\n

In October 2019, BEZA and Adani Ports & SEZ (APSEZ) signed<\/a> a memorandum of understanding to develop the Indian Economic Zone (IEZ) within Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN), a 30,000-acre flagship industrial city.<\/p>\n

In April 2022, a joint-venture term sheet followed, promising accelerated development. India supported the scheme with $115 million<\/a> from its third Line of Credit (LoC), approved in parallel by Bangladesh\u2019s Executive Committee of the National Economic Council (ECNEC). <\/p>\n

On paper, at least, the SEZ\u2019s stars were aligned.<\/p>\n

One-way street<\/p>\n

The financing structure mattered. Indian LoCs are export-promotion tools, not pure development aid. They typically require at least 75%<\/a> of the contract value to be sourced from India, with narrow scope to reduce that to 65% for civil works.<\/p>\n

That meant Bangladesh would borrow hard currency only to pay Indian firms for equipment, contractors and consultants\u2014while effectively shutting out many Bangladeshi participants.<\/p>\n

Such conditions are hardly unique to India\u2014many export credit agencies impise domestic content requirements\u2014but in this case, the thresholds were steep and the procurement funnel exceptionally tight.<\/p>\n

Even BEZA officials acknowledged<\/a> the rigidity, formally requesting that the Exim Bank of India allow Bangladeshi firms to bid on core land development works. Their letters, however, reportedly went unanswered.<\/p>\n

The result was predictable. With only two Indian companies prequalified\u2014APSEZ and International Seaport Dredging\u2014the field was too narrow. Both firms withdrew before the February 28, 2024, deadline, leaving BEZA with no bidders and no fallback. The project froze.<\/p>\n

A landlocked \u2018giveaway\u2018<\/p>\n

To be clear, under BEZA\u2019s framework, economic-zone plots are leased \u2013 not sold. Sovereign title remains with the Bangladeshi state, typically for 50 years<\/a> and subject to renewal. <\/p>\n

But formal ownership is cold comfort when 900 acres of scarce industrial land sits locked up under conditions that preclude local involvement, suppress competition and ultimately yield no development.<\/p>\n

By mid-2024, the IEZ had shown no visible progress<\/a> for two years. The joint venture never moved beyond paperwork and the land development tender had collapsed. Meanwhile, BSMSN\u2019s other zones, unencumbered by country labels or tied credit, welcomed new tenants and broke ground on facilities.<\/p>\n

Bangladesh\u2019s own investment chief<\/a> was blunt in May 2025: \u201cThe Indian Economic Zone exists only on paper.\u201d For industrial policy, that is the only verdict that counts.<\/p>\n

Three design flaws baked in:<\/p>\n

1) Vendor-tied finance. With 65\u201375% of contract value required to be sourced from India, competitive tension was absent. Tied credit inflated costs, limited local spillovers and locked Dhaka into a cycle of dependency.<\/p>\n

2) A country-tagged zone. Branding the zone for a single country signaled exclusivity. When the prequalified firms withdrew, Bangladesh had no viable replacements. A sector-focused, country-neutral model would have widened the investor base and preserved bargaining power.<\/p>\n

3) Process opacity and drift. Even after the 2022 term sheet, BEZA acknowledged that APSEZ had not responded<\/a> to key drafts. Deadlines slipped<\/a> from 2021 to 2025 without physical progress. When terms lack transparency and milestones go unenforced, drift is inevitable.<\/p>\n

Dhaka\u2019s next move<\/p>\n

Bangladesh should adopt a pragmatic, sector-focused approach to unlock the stalled 900 acres.<\/p>\n

By removing the country tag and repackaging the land as a specialized industrial zone\u2014whether for electronics, auto components or renewable energy\u2014the government can attract stronger interest through an international tender open to both local and foreign developers, backed by strict use-it-or-lose-it clauses.<\/p>\n

Financing must also be restructured. Concessional credit is valuable only if it enables fair competition. If India cannot meaningfully relax sourcing thresholds, Dhaka should pivot to neutral financing from multilateral institutions or alternative partners.<\/p>\n

To avoid suspicion and ensure accountability, the government must publish the terms of joint venture governance, procurement rules and development schedules.<\/p>\n

Crucially, the model must generate local economic multipliers by mandating domestic subcontracting, workforce training and technology-transfer \u2014ensuring that industrialization strengthens Bangladesh\u2019s capabilities rather than outsourcing them abroad.<\/p>\n

Time to unwind<\/p>\n

For host countries across the Global South, the Mirsarai IEZ saga is a warning about the double bind of country-tagged zones plus vendor-tied credit. Each carries risks; together, they almost guarantee disappointment.<\/p>\n

Sovereign title on paper is not enough. When foreign firms control contracts, financing and even the labor pipeline, the host country bears the opportunity cost and political blowback without reaping the benefits.<\/p>\n

Bangladesh\u2019s broader economic zone strategy is not broken. BSMSN has attracted dozens of tenants \u2013 from South Korean electronics firms to local apparel manufacturers \u2013 by offering competitive infrastructure and regulatory clarity. The contrast between those successes and the stillborn IEZ shows what works: openness, competition and time-bound accountability.<\/p>\n

No deed changed hands. But Bangladesh segregated 900 acres for a foreign-branded enclave, tied its financing to credit that funneled money back to the lender\u2019s suppliers and then watched the nominated bidders walk away, leaving the zone \u201conly on paper.\u201d<\/p>\n

By outcomes, not intentions, the IEZ was a de facto land giveaway. Dhaka\u2019s task now is to unwind it\u2014and ensure that in the future, land, credit and politics align to serve Bangladesh\u2019s diversification goals, not its neighbors\u2019 export ambitions.<\/p>\n

Md Obaidullah is a visiting scholar at Daffodil International University, Dhaka. He is also a graduate assistant at the Department of Political Science, University of Southern Mississippi. He has published extensively with Routledge, Springer Nature and SAGE. Obaidullah also regularly contributes to prominent platforms, including the LSE South Asia blog, The Diplomat, Asia Times, The Geopolitics, Modern Diplomacy, The Business Standard, Daily Observer, New Age and Dhaka Tribune.<\/p>\n","protected":false},"excerpt":{"rendered":"When Prime Minister Narendra Modi visited Dhaka in June 2015, he sought to pave the way for an…\n","protected":false},"author":2,"featured_media":153620,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[102769,64,63,102770,102771,7025,99,164,1209,102772,102773],"class_list":["post-153619","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-adani-ports-sez","tag-au","tag-australia","tag-bangladesh-india","tag-beza","tag-block-2","tag-business","tag-economy","tag-india","tag-india-economic-zone","tag-international-seaport-dredging"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/153619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=153619"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/153619\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/153620"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=153619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=153619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=153619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}