Bangladesh Is Not Pakistan — It Knew a Trade War with India Would Be a Mistake

In South Asia, where borders often define not just geography but ideology, two very different responses to India tell a story of two nations—and two futures. While Pakistan has repeatedly chosen confrontation, often at the cost of its own economic survival, Bangladesh is quietly showing the region what pragmatism looks like.

Faced with a growing trade dispute with India, Bangladesh had every reason to retaliate. Instead, it chose to de-escalate. It asked for dialogue, not revenge. And in doing so, it may have avoided the kind of economic spiral that has crippled Pakistan.

This decision wasn’t just about trade—it was about national strategy. It was about learning from a neighbor’s mistakes. And it may well define Bangladesh’s rise as a stable, forward-looking economy in South Asia.

Let’s understand why.
Bangladesh and India share a deep historical connection. In 1971, during the Liberation War, India played a pivotal role in helping Bangladesh (then East Pakistan) gain independence from West Pakistan. India’s military intervention not only ended a genocide but helped establish Bangladesh as a sovereign state.

Since then, while relations have had their ups and downs, the trajectory has mostly been cooperative—unlike the hostile India-Pakistan dynamic. This history is essential context in understanding Dhaka’s approach today.
The latest tension began on April 13, 2025, when Bangladesh imposed a ban on yarn imports from India through four key land ports. India responded by:

• Revoking trans shipment facilities for Bangladeshi readymade garments headed to third countries.
• On May 17, banning imports of Bangladeshi goods—including clothing, processed food, and furniture—via land routes.

This escalation threatened to derail a trade relationship vital to Bangladesh’s economy.
In a high-level meeting in Dhaka, Commerce Secretary Mahbubur Rahman clearly stated:
“Our effort is to ensure that the situation does not worsen. We will not resort to any retaliatory action.”

Instead, Bangladesh has formally requested a Commerce Secretary-level meeting with India, stating:
“Sit down, talk, and find a solution.”

The reason is pragmatic: a trade war would severely hurt Bangladesh—far more than India.
India is Bangladesh’s second-largest trading partner after China. Here is the latest bilateral trade snapshot for the fiscal year 2023–24:

• Total trade: 10.56 billion US dollars
• Bangladesh’s exports to India: 1.56 billion US dollars
• Imports from India: 9 billion US dollars

Bangladesh depends on India for:

• Raw materials (yarn, textiles)
• Agricultural goods and food grains
• Machinery and industrial chemicals
• Energy and cross-border electricity supply

Additionally, under the South Asian Free Trade Area agreement, Bangladesh enjoys zero-duty access to Indian markets—a rare benefit that boosts its export competitiveness.

A full-scale trade war could disrupt supply chains and spike domestic costs, particularly when 350,000 tonnes of Indian imports are stranded at land borders.
India and Bangladesh have spent the last decade deepening economic cooperation. Key initiatives include:

• Power-sharing agreements: India exports electricity to Bangladesh through cross-border grids.
• Rail and inland waterway connectivity: Revival of pre-Partition routes for smoother logistics.
• Indian Special Economic Zones in Bangladesh: To boost exports and regional industrialization.
• Border Haats: Small markets for cross-border trade in rural areas.
• Bilateral payment mechanisms: Efforts to reduce dollar dependence in trade.

These initiatives signal a long-term vision—not just transactional trade.
In contrast, Pakistan’s economy has crumbled under the weight of poor governance, political instability, and repeated confrontations with India. The country’s external debt is now over 130 billion US dollars, and foreign reserves have repeatedly dipped below 4 billion US dollars—barely enough to cover weeks of imports.

Since 2001, Pakistan has approached the International Monetary Fund over 22 times, including:

• A 6 billion US dollars bailout in 2019
• A 3 billion US dollars Stand-By Arrangement in 2023, requested amid economic instability
• And reportedly, additional loan discussions in 2025 to manage wartime expenses following the latest military escalation with India.

These wartime costs, combined with diplomatic isolation, have left Pakistan economically paralysed. Inflation is high, the Pakistani rupee is weak, and food and energy shortages have worsened.
Bangladesh is watching. Experts believe Dhaka sees Pakistan as a cautionary tale—and is determined to avoid the same fate. Even when provoked economically, Bangladesh chose diplomacy over knee-jerk nationalism.

That is why it did not retaliate. That is why it asked for talks.

Business leaders have also urged the government to seek a three-month grace period for clearing imported Indian goods already stuck at land ports—showing a preference for solutions over posturing.
Bangladesh knows its history. It knows who stood with it in 1971. And it knows what happens when emotion drives economics.

Pakistan’s downfall wasn’t inevitable—it was chosen, one bad decision at a time. Bangladesh is refusing that path.

This is not a sign of weakness. It’s a sign of strength. It’s a message to the region—and the world—that Bangladesh is not here to play politics with its people’s future.

Bangladesh is not Pakistan. And that’s not just a difference. It’s a decision.

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