Bangladesh inks loan agreement with China to modernise Mongla Port

• Bangladesh has signed a $335.78 million concessional loan agreement with China to expand and modernise its southwestern Mongla Port.

• Mongla is Bangladesh’s second-largest seaport after Chattogram and is located on the east bank of the Pasur River.

• The port is located about 80 km west of the Indian border.

• The agreement will finance the construction of two container terminals and dedicated cargo-handling yards at Mongla as Dhaka seeks to expand the port’s capacity and infrastructure.

• China will provide the loan at a concessional interest rate of 2 per cent, with a 20-year repayment period, including a five-year grace period.

• The loan agreement follows an understanding reached between Bangladesh and China during Prime Minister Tarique Rahman’s visit to Beijing in June.

Why it raises concerns for India?

• The development comes a year after the Muhammad Yunus-led interim government cancelled an Indian Economic Zone project planned on 110 acres of land near Mongla Port, saying the Indian government-nominated developer had failed to begin physical construction within the stipulated timeframe.

• The land had been earmarked for India under a 2015 bilateral agreement, and the Indian government later appointed Hiranandani Group subsidiary Evita Constructions to develop the site.

• India had financed a key rail connectivity project, the Khulna-Mongla railway line, to enhance the port’s connectivity to the hinterland.

• Access to Chittagong and Mongla ports for transit cargo from northeastern India to the rest of India via Bangladesh was operationalised in 2023.

• India has previously flagged concerns over China’s expanding footprint in Bangladesh, with projects in strategically significant areas drawing particular attention because of their proximity to Indian territory. 

• Lalmonirhat Airbase is being developed with Chinese assistance although the Director of Military Operations of Bangladesh Army has stated that there are currently no plans to upgrade the airstrip for military use.