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Bangladesh cancels Indian Economic Zone agreement, unveils new Defence Economic Zone

Bangladesh has cancelled a proposed Indian Economic Zone in Mirsharai and will instead set up a Defence Economic Zone, raising fresh concerns for India.

By NES Web Desk

Jan 27, 2026 00:46 IST

The interim government of Bangladesh under Muhammad Yunus has decided to set up a 'Defence Economic Zone' on land previously given to India, disregarding an agreement from the time of former Prime Minister Sheikh Hasina. This decision was made at a meeting of the Bangladesh Economic Zones Authority (BEZA) on Monday. Experts in international relations believe this move is important and could affect India-Bangladesh ties.

Approximately 850 acres of land in Mirsharai, Chattogram, had been proposed for creating an 'Indian Economic Zone'. However, on Monday, BEZA Executive Chairman Ashik Chowdhury announced that the proposal has been cancelled. Instead, a Defence Economic Zone will be established on that land. Factories for manufacturing military equipment and weapons will be set up there.

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Questions over investment and foreign involvement

Naturally, the question arises as to whose investment will be behind the sudden creation of a military zone on land designated for India. BEZA has not clearly answered this question. It has stated that discussions are ongoing with multiple countries that have "friendly relations" with Bangladesh.

A section of diplomatic circles fears that by countries with "friendly relations", Dhaka could be referring to China or Pakistan. They may be involved in this military project. Beijing has previously been seen assisting Pakistan in weapons-related matters. At present, China's friendship with Dhaka is also gradually increasing. The possibility of Chinese or Pakistani weapons factories being built close to India's border is causing unease in New Delhi.

Strategic implications for India-Bangladesh ties

Ashik Chowdhury further noted that discussions have been ongoing for a long time regarding the production of weapons and other equipment in the military industry. He added that there is a global demand for these. This has raised questions in diplomatic circles about whether the Yunus government aims to revive the economy by selling weapons, following Pakistan's model. Economically strained Pakistan has sought to position itself as an arms supplier, and Bangladesh is now believed by some analysts to be considering a similar path.

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Following the Adani power and Teesta issues, the Yunus government's decision regarding Mirsharai signals a new chill in India-Bangladesh relations, according to diplomatic analysts. In their assessment, Dhaka's latest announcement is undoubtedly a cause for concern for New Delhi.

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