Dhaka: Bangladesh has officially cancelled the Indian Economic Zone project in Mirsharai, Chattogram. The decision came after a high-level meeting of the Bangladesh Economic Zone Authority (BEZA) board, led by Chief Advisor Mohammed Yunus, with input from the Bangladesh Investment Development Authority (BIDA).
The government will use the land allocated for the project to build a Defence Industrial Zone to boost local military production. Officials say the decision followed former Prime Minister Sheikh Hasina’s virtual address to the media New Delhi. The decision is like to further sour India-Bangladesh relations.
The Indian Economic Zone had been envisioned as a symbol of economic cooperation between India and Bangladesh. Signed in 2015 under a memorandum of understanding, the project had planned to develop hundreds of acres in Mirsharai and an additional site in Mongla, Bagerhat, under Bangladesh’s National Special Economic Zone framework. India had also extended a line of credit at preferential rates to support the project.
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The project was intended to strengthen industrial collaboration and economic integration between the two countries. However, the Yunus government has claimed that despite repeated requests to approve international tenders and accelerate progress, little tangible development occurred.
Officials said that only around one percent of the allocated funds had been utilised, while Indian contractors showed minimal interest. By 2025, the project had effectively been removed from the government-to-government talks.
Instead, Bangladesh is now moving forward with a Defence Industrial Zone. The BEZA governing board has allocated roughly 850 acres of the previously earmarked land in Mirsharai for a dedicated military economic zone. The focus will be on expanding domestic defence manufacturing, including military equipment, components and related technologies.
The officials said that discussions are ongoing with multiple friendly countries regarding potential investment in the zone. Decisions on the specific types of military products to be manufactured will be guided by demand. The board also approved other initiatives during its meeting, including the establishment of a free trade zone.
The cancellation of the Indian Economic Zone comes at a delicate time. Relations between the two nations have already been strained since Yunus took over. The scrapping of the project could affect bilateral economic ties, as several development initiatives in Bangladesh rely heavily on Indian investment and lines of credit.
The Indian Economic Zone had been considered a flagship project symbolising strong cooperation and economic partnership between the two nations and was expected to generate significant employment in Bangladesh. With the project now cancelled, hopes of widespread job creation have dimmed, leaving many in Bangladesh disappointed.