Bangladesh Signs $336 Million China Loan for Mongla Port Near India Border at 2% Interest

Bangladesh and China have signed a $335.78 million loan agreement to expand and modernise Mongla Port, raising strategic questions for India about Beijing’s growing influence near its eastern border and across the Bay of Bengal.

Signed in Dhaka on October 10, the agreement provides concessional financing from the Export-Import Bank of China at 2 per cent annual interest, with a 20-year repayment period and a five-year grace period. Alia Meher, joint secretary in Bangladesh’s Economic Relations Division, signed the agreement with Fengjun Tian, assistant general manager of China Exim Bank.

The project includes two container terminals, cargo-handling yards, modern cranes, automated systems and dredging along the Pasur River to accommodate larger vessels. Located around 80 kilometres from India’s West Bengal border, Mongla is Bangladesh’s second-largest maritime port after Chattogram.

The expansion aims to ease congestion at Chattogram, which has historically handled more than 80 per cent of Bangladesh’s international maritime trade. Improved connectivity following the opening of the Padma Bridge has strengthened Mongla’s potential as a gateway for ready-made garment exports and bulk imports. Its location near the Sundarbans and maritime routes serving Kolkata and Haldia also makes it strategically significant. The port could facilitate transit to India’s northeastern states, Nepal and Bhutan.

India had earlier planned to support Mongla’s expansion through a bilateral Line of Credit. Indian firm Evita Constructions, associated with the Hiranandani Group, was designated for key construction and terminal-upgrading works. However, administrative delays, land disputes, changes in project scope and political transitions in Dhaka reportedly disrupted the plans, and the Indian contract allocation was cancelled. China’s financing has now filled the funding gap.

The development adds to Beijing’s infrastructure presence across the Indian Ocean, including Gwadar in Pakistan, Hambantota in Sri Lanka and Kyaukphyu in Myanmar. Modern port facilities could potentially support naval logistics and maritime monitoring, prompting concerns about Chinese access near India’s eastern maritime approaches and the strategically sensitive Siliguri Corridor. However, Chinese investment alone does not establish that Mongla will become a military facility. Bangladesh retains sovereignty over the port.

For Dhaka, the deal addresses growing shipping requirements and supports an export-driven economy. China has financed projects including the Padma Bridge rail link, the Karnaphuli River tunnel and power plants, while supplying much of Bangladesh’s military hardware. Prime Minister Tarique Rahman’s June 2026 visit to Beijing further underlined bilateral engagement. Bangladesh nevertheless seeks partnerships with China, India and Western countries.

India could respond by accelerating Sittwe Port and the Kaladan project in Myanmar, strengthening Chabahar Port in Iran, developing the proposed Great Nicobar transshipment hub and deepening rail, waterway, petroleum pipeline and electricity connections with Bangladesh.

Ultimately, the strategic implications will depend on Mongla’s operating arrangements, foreign naval access and safeguards for Indian transit cargo and commercial data.