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India has suspended – nearly ₹5000 crore worth of funding, as per some estimates – and other construction-related work on railway connectivity initiative in Bangladesh, citing ongoing “political turmoil” and “safety of labour”.
The decision, which halts at least three ongoing projects and pauses survey work on five others, mostly disrupts plans to link India’s North East with its mainland through routes traversing Bangladesh, sources told businessline.
As New Delhi recalibrates, it is redirecting resources to bolster rail infrastructure in North India and explore alternative connectivity through Bhutan and Nepal, possibly reshaping regional trade dynamics. Sources say a ₹3500 – 4000 crore connectivity plan through Bhutan and Nepal is being explored.
The stalled projects were critical for connecting India’s landlocked North Eastern states via Bangladesh’s rail network. They were designed to reduce dependence on the narrow Siliguri Corridor, or “chicken’s neck,” which links the region to mainland India.
“So right now we are not supplying construction materials or other items to Bangaldesh. There a halt on project funding for connectivity route were through the neighbouring country. There needs to be some political stability first. However, construction work on the Indian sides is going on as planned,” the official said requesting anonymity.
India’s trade relationship with Bangladesh, valued at $ 12.9 billion in 2024, is a cornerstone of regional economic ties. Bangladesh has been India’s largest trading partner in South Asia.
Projects stalled
Three India- assisted projects that have now been suspended include Akhaura – Agartala Cross-Border Rail Link and Khulabura-Sahabajpur rail line laying; Khulna – Mongla Port Rail Line; and the Dhaka – Tongi – Joydebpur rail expansion project.
The Akhaura – Agartala (Tripura)Cross-Border Rail Link project has been executed under Government of India grant assistance of nearly ₹400 crore extended to the neighbouring country. The length of the rail link is 12.24 km with a 6.78 km dual gauge rail line in Bangladesh and 5.46 km in Tripura. The Khulabura-Sahabajpur rail line is part of this project; and aims to improve connectivity to Assam by utilizing existing trade routes and laying new tracks.
The Khulna – Mongla Port Rail Line project is being implemented under concessional Line of Credit with a total project cost of $ 388.92 million (₹3300 crore). The project entails construction of approximately 65 kms of broad gauge rail route between Mongla Port and the existing rail network in Khulna. With this, Mongla, the second largest port of Bangladesh, gets connected with the broad-gauge railway network. India has operational rights to a terminal in Mongla.
The Dhaka – Tongi-Joydebpur railway expansion project due for completion in June 2027 has seen delayed execution of less than 50 per cent till last year. Nearly Rs 1600 crore of the project was reportedly to be through Indian assistance (by EXIM Bank of India). There have also been issues with getting funding clearances, sources said.
“In another five, there were location surveys that were being carried out. They have been stalled,” a second official said.
Alternative regional strategy
In response, India is pivoting to domestic and alternative regional strategies.
The government is exploring the possibility of line doubling and quadrupling in Uttar Pradesh and Bihar, key arteries feeding into the Siliguri Corridor, to enhance capacity and reliability. “Survey work is underway,” said a second Railway official.
Simultaneously, New Delhi is exploring rail links through Bhutan and Nepal, leveraging existing agreements like the India-Nepal rail pact and Bhutan’s proximity to the North East. These routes, while logistically complex, could diversify India’s connectivity options and reduce reliance on Bangladesh.
For instance, a previous plan for improved connectivity between India and Nepal included construction of 190 km of new lines between Biratnagar – New Mal; and another 12.5 km of new lines in Galgalia – Bhadrapur – Kajali Bazar sections.
In West Bengal (improving connectivity in the Chicken Neck region) 170 km new railway line construction is set to happen in Kumedpur – Ambari Falakata segment; while 25 kms of new line laying will be done to improve connectivity between Bengal and Bihar.
Published on April 20, 2025
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