New Delhi is confronting a multifaceted policy puzzle in its relationship with Bangladesh, according to a recent piece in The Diplomat. The article outlines how India’s traditional emphasis on close cooperation with its southern neighbour is being tested by a series of overlapping issues that range from water allocation to regional security dynamics.

One of the most pressing points of contention is the long‑standing dispute over the Teesta River, which supplies water to both countries. While India has offered to increase releases during the dry season, Bangladesh continues to press for a more binding agreement, arguing that insufficient water flow hampers agriculture and livelihoods in its northern districts. The Diplomat notes that the impasse has strained bilateral talks and raised questions about India’s willingness to concede on a core national interest.

Security concerns also feature prominently. The influx of Rohingya refugees from Myanmar, many of whom have settled in Bangladesh’s Cox’s Bazar district, has created a humanitarian challenge that spills over into border management. India has expressed apprehension about the potential for radicalisation and cross‑border crime, while simultaneously seeking to avoid overt interference in Bangladesh’s internal affairs.

Compounding these issues is the growing presence of Chinese investment and infrastructure projects in Bangladesh, which New Delhi views through the lens of its own strategic competition with Beijing. The Diplomat points out that Chinese-backed ports, rail links and energy ventures are deepening Dhaka’s economic ties to Beijing, prompting Indian officials to reassess the balance between partnership and rivalry.

Economic interdependence remains a stabilising factor, with bilateral trade exceeding $15 billion annually and a substantial flow of Indian labor into Bangladesh’s manufacturing sector. Yet the article warns that trade benefits could be undermined if political friction escalates.

The Diplomat concludes that India must navigate a delicate path: it needs to sustain cooperation on trade, energy and security while addressing Bangladesh’s demands on water sharing and respecting its sovereign choices amid Chinese engagement. The outcome of this diplomatic balancing act will shape South Asia’s geopolitical landscape in the coming years.

Reporting attribution: based on reporting by The Diplomat — original source: https://thediplomat.com/2026/09/indias-sheikh-hasina-dilemma/.