However, Bangladesh has started to closely work with China, a move that is expected bothering India. China gains economic leverage over India as it secures a $250 million contract for an airport terminal in the northeastern city of Sylhet close to Bangladesh’s sensitive border with India. On the other hand, China opened its market to 97% that approximately eight thousand Bangladeshi products. Dhaka described the windfall as “economic diplomacy,” however it did not fail to reportedly set off alarm bells in New Delhi.

Bangladesh Foreign Minister A. K. Abdul Momen had stated that the contract for building an airport terminal at Sylhet was not awarded to an Indian firm because of a high bid and therefore, went to a Chinese firm. “From what I have heard, the Chinese are technically qualified and have the lowest rates. India’s offer was too much and as a result, they could not make it,” Momen was quoted as saying by the Dhaka Tribune.

Not only this but Bangladesh has also turned to China to finance a water management project along the Teesta river. Bangladeshi Water Resources Ministry requested nearly $1 billion from China. This is after a water-sharing accord with India sat in oblivion for eight years because of stiff opposition in the state of West Bengal.

Recently, Bangladesh’s Foreign Minister AK Abdul Momen commented on the issue explaining Dhaka’s connection with New Delhi as “historic” and “rock-solid” that will not be hindered by anything. His remarks came as he visited a memorial complex at western Meherpur bordering India to pay tributes to the 1971 Liberation War martyrs.

According to Ali Riaz, who is also a senior fellow with think tank Atlantic Council in Washington, Bangladesh could end up becoming “the theater for a proxy war” between India and China.

Riaz in an interview called India’s discomfort about the growing Bangladesh-China bonhomie reasonable. He predicted that China’s expanding trade and investment in Bangladesh will undermine the Indian influence, which has already been shrinking in stages.

Bangladesh aims to achieve the United Nations Developing Nation status by 2024. This would be a rise from its current least-developed status. That should involve forming partnerships with countries like the U.S., according to M. Humayun Kabir, a former ambassador to the U.S. who is now acting president of the Bangladesh Enterprise Institute.

India’s record of implementing projects in its neighbourhood has been “abysmally poor”, which pushes Bangladesh more towards China, said the sources in Dhaka where a number of Indian projects have not really taken off or are moving at an extremely slow pace.

Bangladesh is also bothered with India for not giving a meaningful push to SAARC and BIMSTEC. India is a major player in both the geopolitical unions and can boost regional trading and connectivity. Besides, the Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement has also not been making much progress.

“For the time being, this is mostly a signalling game and relations between India and Bangladesh appear to remain strong and even better than ever before,” said Xavier of Brookings India. “But beyond political slogans of Neighbourhood First or India First, China’s growing influence in Bangladesh is forcing India and Bangladesh to establish an increasingly transactional relationship.”