In a significant development affecting Bangladesh’s rail infrastructure plans, India has decided to withdraw from three major railway projects that were part of the bilateral transit corridor initiative. These projects-originally financed through an Indian Line of Credit (LoC)-include the construction of a new railway line between Bogra and Sirajganj, the double-line railway in Khulna-Darshan, and the conversion of the Parbatipur-Kaunia meter gauge railway to dual gauge.
The withdrawal follows a bilateral meeting held on March 5-6, 2025, between Indian and Bangladeshi railway officials, where the Indian side expressed disinterest in continuing financial support for these projects. Bangladesh Railways officials have since confirmed that, while India has not officially canceled the loan agreements, it has halted further financing. This situation has created uncertainty around project continuation and financing alternatives.
Background: India’s Role in Bangladesh’s Transit Rail Development: During the tenure of the Awami League government, India secured approval to operate its trains from Gede in West Bengal to Dalgaon on the Bhutan border via Bangladesh’s railways. This cross-border connectivity was part of broader plans to develop a regional transit corridor to boost trade and economic integration among Bangladesh, India, Bhutan, and Nepal.
As part of this initiative, the three railway projects were designed to enhance capacity and regional rail communication:
Bogra-Sirajganj new railway line aimed at cutting travel distances by establishing a direct rail link in a region currently lacking rail infrastructure. Khulna-Darshan double-line railway intended to increase capacity and establish a vital freight corridor connecting the Mongla Port with northeastern Indian states and Bhutan. Parbatipur-Kaunia gauge conversion sought to upgrade existing meter gauge tracks to dual gauge, facilitating better connectivity with neighboring countries.
These projects were approved by the Executive Committee of the National Economic Council (ECNEC) in 2018, with implementation planned from 2018 to 2025. Project Details and Current Status: 1. Bogra-Sirajganj Railway Line.
Currently, trains traveling from Parbatipur to Chilahati must detour via Natore-Naogaon due to the absence of a direct line. The new Bogra-Sirajganj rail link would significantly shorten this route. Estimated cost: Tk 5,580 crore, Indian loan portion: Tk 3,146 crore.
Progress: Land acquisition nearly complete, with approximately Tk 1,900 crore allocated in the current fiscal year budget. Bangladesh Railways is now exploring alternative financing, with interest shown by the Asian Development Bank (ADB).
Khulna-Darshan Double-Line Railway: This project aims to improve rail connectivity to Mongla Port, facilitating efficient freight movement to northeastern India, Nepal, and Bhutan. Estimated cost: Tk 3,507 crore, Indian loan portion: Tk 2,690 crore.
Status: Suspended following India’s withdrawal; awaiting further decisions. Parbatipur-Kaunia Dual Gauge Conversion, upgrading this meter gauge line to dual gauge would strengthen rail links with India, Bhutan, and Nepal, enhancing trade and passenger connectivity. Estimated cost: Tk 1,683 crore, Indian loan portion: Tk 1,367 crore.Status: Suspended; Bangladesh awaiting new financing avenues.
Official Reactions and Next Steps: Muhammad Fauzul Kabir Khan, advisor to the Ministry of Railways, said: “India has expressed its desire to withdraw from these three projects, and we have no disagreements regarding this decision. Our focus now is to implement these projects through alternative means, and we have begun organizing necessary steps to achieve this.”
Bangladesh Railway officials highlighted the difficulty posed by India’s reluctance to officially cancel the loan agreements, which currently prevents Bangladesh from securing new financing for the suspended projects. However, efforts are underway through the Ministry of Economic Relations Division (ERD) to attract new investors and financial institutions.
Implications for Regional Connectivity and Economic Development: The suspension of these projects is a setback to Bangladesh’s ambition of becoming a key regional transit hub. The Khulna-Darshan railway, in particular, was expected to play a strategic role in freight transport from Mongla Port to India’s northeastern states, Nepal, and Bhutan. Similarly, the Bogra-Sirajganj link was crucial in shortening travel routes and easing rail logistics within northern Bangladesh.
Moreover, the Parbatipur-Kaunia gauge conversion was aimed at integrating Bangladesh’s rail network more seamlessly with neighboring countries, enhancing cross-border trade and passenger movement.
The Indian withdrawal introduces uncertainties that could delay project timelines and affect regional trade prospects. However, Bangladesh’s commitment to continuing these projects through alternative financing signals determination to keep the momentum.
Looking Ahead: Financing Alternatives and Strategic Priorities: Given the current situation, Bangladesh Railways is intensifying efforts to secure funding from multilateral agencies such as the Asian Development Bank and potentially the World Bank. Discussions are ongoing to repurpose national budget allocations toward critical elements like land acquisition, ensuring that groundwork continues despite funding uncertainties.
Railway officials remain optimistic that, with renewed investment and careful project management, these strategic rail projects will eventually be completed, fostering stronger regional integration.
India’s withdrawal from three major rail transit projects in Bangladesh marks a critical juncture in the bilateral infrastructure partnership. While it poses immediate challenges, Bangladesh’s proactive steps toward alternative financing and project management demonstrate resilience. The government’s ability to navigate these changes will be vital in ensuring that the broader vision of enhanced regional rail connectivity and economic cooperation is not lost. As Bangladesh pursues these ambitions, the coming months will be crucial in determining how quickly these projects can be revitalized and brought to fruition without further delays.
