Dhaka; October 2026: Bangladesh has signed a $335.78 million concessional loan agreement with China to expand and modernise Mongla Port in the country's southwest, which is located around 80 kilometres from the Indian border. The landmark deal finances the comprehensive expansion and modernisation of southwestern Bangladesh’s Mongla Port, the country’s second-largest maritime gateway after Chattogram.
The agreement was signed in Dhaka between Alia Meher, Joint Secretary of the Economic Relations Division (ERD) under Bangladesh’s Ministry of Finance, and Fengjun Tian, Assistant General Manager of the Export-Import Bank of China (Exim Bank), against a backdrop of evolving diplomatic ties and political shifts in Dhaka, this agreement marks a decisive step in Beijing’s maritime influence under the Belt and Road Initiative (BRI).
The newly signed loan agreement provides targeted concessional financing to execute the project officially titled “Expansion and Modernisation of Mongla Port Facilities”.
·Total loan amount: US$ 335.78 million (RMB 2.404 billion or Tk 3,592.90 crore).
·Lending entity: Export-Import Bank of China (Exim Bank).
·Borrowing entity: Economic Relations Division (ERD), Ministry of Finance, Government of Bangladesh.
·Interest rate: Preferential concessional rate of 2.0 per cent per annum.
·Repayment schedule: 20-year total tenure, featuring a 5-year grace period.
The project scope comprises the construction of 02 state-of-the-art container terminals, the creation of dedicated cargo-handling yards and heavy logistics storage, the installation of modern quay gantry cranes, automated cargo systems, and deep-water handling machinery, and the dredging and channel widening along the Pasur River to accommodate higher-capacity gearless and container vessels.
While Chattogram Port historically handled over 80% of Bangladesh’s international sea trade, severe vessel congestion at Chattogram led consecutive governments in Dhaka to invest heavily in Mongla. The opening of the multi-billion-dollar Padma Multimodal Bridge drastically cut transit time between Dhaka and Mongla, transforming the port from a secondary regional hub into a high-capacity gateway serving the nation’s ready-made garment (RMG) export industry and heavy bulk imports.
However, geography makes Mongla vital beyond commercial shipping. Mongla sits roughly 80 km (50 miles) from the Indian border in West Bengal. It sits adjacent to the Sundarbans mangrove ecosystem and near critical Indian maritime approach routes into the Port of Kolkata and Haldia Dock Complex.
Mongla is also geographically optimised to provide sea transit access to landlocked Bhutan, Nepal, and India’s landlocked North Eastern Region (the "Seven Sister" states).
Mongla Port expansion was originally slated to be a showcase for India-Bangladesh infrastructure cooperation. Under a bilateral Line of Credit (LoC) framework established between India and Bangladesh, a major portion of Mongla Port's expansion was earmarked for Indian contractors. In 2015, the Indian infrastructure firm Evita Constructions (a subsidiary of the Mumbai-headquartered Hiranandani Group) was designated to execute key civil construction and terminal upgrading works at Mongla Port.
However, the project suffered from administrative delays, land allocation disputes, scope adjustments, and political transitions in Dhaka. Eventually, the planned participation of the Indian firm fell through, culminating in the cancellation of the Indian contract allocation. With Indian firms exiting the specific terminal modernisation packages, China, stepped in with quick Exim Bank concessional financing, and its willingness to commit $335.78 million directly fills the funding gap, locking in Chinese engineering state-owned enterprises (SOEs) to build, manage, and equip the infrastructure.
INDIA’S CONCERN –
Although, Bangladesh frames the project purely as an economic necessity to boost maritime trade, political analysts has flagged several ramifications for India.
·The "String of Pearls" - For over two decades, Indian defence experts have tracked Beijing’s "String of Pearls" strategy: a network of Chinese-built, Chinese-funded, or Chinese-operated commercial ports across the Indian Ocean Region (IOR).
Key developments include:
·Gwadar Port in Pakistan (CPEC anchor).
·Hambantota Port in Sri Lanka (99-year operational lease).
·Kyaukphyu Deep-Sea Port in Myanmar.
·Djibouti Naval Base in the Horn of Africa.
With China securing a central role in modernising Mongla Port, alongside its existing footprint at Payra Port and the Babanaban/Chattogram maritime projects, Beijing consolidates its presence along the northern apex of the Bay of Bengal. Even if Mongla remains a commercial port under Bangladeshi sovereignty, dual-use infrastructure is a concern for naval planners.
Modern container terminals feature deep-water berths, high-capacity cranes, radar monitoring, and logistics yards, all of which can support naval intelligence gathering, monitoring of Indian Warship movements out of Kolkata/Vizag, or logistical replenishment for People's Liberation Army Navy (PLAN) vessels during non-conflict periods.
·Proximity to the "Siliguri Corridor" -Mongla Port lies close to West Bengal and India’s sensitive Eastern Naval Command operational zone. Eastern India is connected to its North-Eastern states through a narrow 22-kilometre strip of land known as the Siliguri Corridor (or the "Chicken’s Neck").
Having Chinese state-owned enterprises constructing and managing critical infrastructure within 80 kilometres of the Indian border grants Beijing an economic and logistical foothold in close proximity to India's most sensitive strategic bottleneck.
Leverage over Bay of Bengal Sea Lanes of Communication (SLOCs)
The Bay of Bengal is a vital transit corridor for international trade and energy shipments moving toward the Strait of Malacca.
China’s growing presence in Bangladeshi ports gives Beijing greater strategic depth in waters that India traditionally viewed as its immediate maritime neighbourhood.
·Trade competition and transit friction - India has consistently sought to use Bangladeshi ports — specifically Chattogram and Mongla, as transit hubs to transport goods cheaply to its remote Northeastern states (such as Tripura, Assam, and Meghalaya).
If Chinese companies build, equip, and install the digital operational software for Mongla's container terminals, questions arise regarding data security and freight tracking privacy for Indian transhipment cargo, operational control over terminal prioritisation, and economic leverage if diplomatic tensions flare between China and India.
BANGLADESH’S PERSPECTIVE -
While international headlines focus on the Sino-Indian rivalry, decision-makers in Bangladesh view the agreement through a practical economic lens.
·Bangladesh's export-driven economy is heavily reliant on ready-made garments and requires sea shipping capacity. Congestion at Chattogram costs Bangladeshi exporters millions of dollars annually in demurrages.
·To achieve its long-term growth targets, Bangladesh requires tens of billions of dollars in port, rail, and energy investments. Western multilateral institutions (like the World Bank or ADB) often move slowly on heavy port infrastructure loans, whereas Chinese state banks offer streamlined loan disbursals.
·At a 02% interest rate over 20 years with a 5-year grace period, the $335.78 million loan is structured as concessional financing rather than commercial debt.
·Bangladesh has historically maintained a policy of "Friendship to all, malice toward none". By engaging China for Mongla, India for power grid connections, and Western nations for export markets, Dhaka seeks to avoid becoming dependent on any single regional power.
CHINA EXPANSION IN BANGLADESH -
China’s emergence as Bangladesh’s primary infrastructure funder did not happen overnight. Over the past decade, bilateral trade between Beijing and Dhaka has expanded rapidly, with China replacing India as Bangladesh’s largest trade partner in goods.
·During Chinese President Xi Jinping’s visit to Dhaka in 2016, Bangladesh formally joined the Belt and Road Initiative, unlocking over $20 billion in proposed infrastructure loans.
·Bangladeshi Prime Minister Tarique Rahman also visited Beijing in June earlier this year (2026) immediately after being sworn in as the Prime Minister as part of his first overseas trip in office.
·Chinese engineering firms have built the landmark Padma Bridge rail link, the Bangabandhu Sheikh Mujibur Rahman Tunnel under the Karnaphuli River in Chattogram, and multiple power generation plants like the Payra thermal plant.
·China also remains the supplier of roughly 70%-80% of the Bangladesh Armed Forces' military hardware, including submarines, frigates, fighter jets, and tanks.
The signing of the Mongla Port loan agreement on October 10 represents a continuation of this economic and infrastructural integration.
INDIA’S REPERCUSSIONS -
Faced with expanding Chinese involvement along its eastern perimeter, India is unlikely to remain passive. Experts in India anticipate a multi-pronged policy response.
Accelerating Indian strategic port projects: To counter Chinese-backed ports in neighbouring countries, India is doubling down on its own international port ventures:
Sithwe Port (Myanmar): Under the Kaladan Multi-Modal Transit Transport Project, India is pushing to operationalise Sithwe Port to connect Kolkata directly with Mizoram.
Chabahar Port (Iran): India recently secured a long-term operational contract for the Shahid Beheshti Terminal at Chabahar to secure trade access to Central Asia and Afghanistan.
Great Nicobar Island Development: India is building a massive Mega International Transhipment Port at Galathea Bay in the Andaman & Nicobar Islands to dominate Malacca Strait shipping flows.
Deepening bilateral integration with Dhaka
Rather than contesting China's capital strength dollar-for-dollar, India focuses on interconnectivity:
·Cross-border freight rail corridors (such as the Akhaura-Agartala rail link).
·Inland waterway trade protocols along the Brahmaputra and Meghna rivers.
·Petroleum pipelines (such as the India-Bangladesh Friendship Pipeline).
·Grid interconnections exporting Indian power to Bangladesh.
By making Bangladesh’s economic grid dependent on Indian energy, transit routes, and consumer markets, India aims to balance China’s heavy hardware investments.
Now, India needs to seek high-level diplomatic assurances from Dhaka that:
·Mongla Port will strictly remain a civil commercial facility.
·No foreign naval vessels (specifically PLAN warships or submarines) will be granted permanent basing, docking, or maintenance facilities at Mongla.
·Indian transhipment cargo through Mongla will receive non-discriminatory treatment and secure access.
Team Maverick.
