GRSE said the cancellation was expected and followed “mutual discussions” with the Bangladesh government, according to The Hindu.
Bangladesh Scraps $21m Defence Deal with India. Bangladesh has cancelled a $21 million defence contract with India’s state-owned Garden Reach Shipbuilders and Engineers Limited (GRSE), amid growing tensions in bilateral relations.
The contract, awarded in July 2024, was for a modern ocean-going tug for the Bangladesh Navy, designed for deep-sea towing and rescue missions. GRSE, a public sector unit under India’s defence ministry, confirmed the cancellation in a stock exchange filing on May 21.
GRSE said the cancellation was expected and followed “mutual discussions” with the Bangladesh government, according to The Hindu.
The company added that the financial impact would be negligible, as the order represented just 0.8 per cent of its ₹22,680.75 crore ($2.7 billion) order book as of March 31, 2025.
No official reason was given by Dhaka. However, as reported by Business Standard, analysts see the move as a possible retaliation for New Delhi’s recent imposition of import restrictions on Bangladeshi goods.
On May 18, India tightened controls at integrated check posts in its northeastern region, affecting shipments of ready-made garments and processed foods.
The moves followed India’s earlier decision to withdraw the transshipment facility that had enabled Bangladeshi goods to reach third countries through Indian territory.
The diplomatic setback comes amid a broader shift in Bangladesh’s foreign policy approach following her departure from Sheikh Hasina’s administration in August 2024.
The sea-going tug, while modest in terms of budget, had been a strategic symbol of India-Bangladesh defence cooperation. Its cancellation signals a deterioration in the relationship.
In a press release on May 22, GRSE said it had been selected as the lowest bidder for the Indian Navy’s Next Generation Corvette (NGC) programme.
The Kolkata-based company has supplied 111 warships to the Indian Navy and friendly foreign navies, including missile and anti-submarine corvettes.
