India-Bangladesh relations have deteriorated suddenly when Bangladesh cancelled a major defence contract worth $21.08M (INR180.25 crore) with Kolkata-based public sector unit, Garden Reach Shipbuilders & Engineers Ltd (GRSE).

The cancelled contract was for the construction of an advanced ocean-going tug for the Bangladesh Navy –– a high-value vessel constructed for deep-sea towing and salvage missions.

According to Business Standard, an Indian daily newspaper, “the cancellation, confirmed in a stock exchange filing by GRSE on Wednesday, deals a significant blow to India's defence exports.

GRSE, which functions under India’s Ministry of Defence (MoD), announced, ‘We wish to inform you that the Government of the People’s Republic of Bangladesh has cancelled the order.’”

Bangladesh has not revealed an official reason for the cancellation; however experts believe the cancellation is a retaliatory move against India. New Delhi has recently changed its policy on regional trade.

Business Standard suggests the Indian actions that triggered Bangladesh’s cancellation were taken on May 18, when New Delhi “imposed strict restrictions on imports of Bangladeshi goods, including ready-made garments and processed foods, particularly blocking them at Integrated Check Posts (ICPs) in the Northeast. This mirrored trade curbs Bangladesh had introduced earlier this year.”