This article covers economic relations between India and Bangladesh: the value and composition of bilateral trade, trade arrangements such as duty-free access and rupee settlement, the infrastructure that carries goods across the border, and cooperation in power and energy. It is based on the Ministry of External Affairs (MEA) brief dated July 2026.
Trade figures
According to the MEA brief of July 2026, Bangladesh is India's largest trade partner in South Asia, and India is the largest export destination of Bangladesh in Asia.
During FY 2025-26, total bilateral trade amounted to approximately USD 12.36 billion. India's exports to Bangladesh were USD 10.56 billion and Bangladesh's exports to India were USD 1.78 billion.
Goods traded
The brief states that India's main exports are raw materials, intermediate goods and machinery, which serve as critical inputs for Bangladeshi industry. Cotton, mineral fuels, food products, vehicles and chemicals constitute the majority of Indian exports to Bangladesh. Bangladesh's exports to India are dominated by ready-made garments.
Trade arrangements
Under the South Asian Free Trade Area (SAFTA) framework, India provides duty-free and quota-free access to nearly all Bangladeshi products.
On 11 July 2023, India and Bangladesh formally launched a new mechanism to settle trade in Indian Rupees (INR). The brief states that it was introduced to help bilateral trade in local currencies, to reduce transaction cost and time, and to improve speed, efficiency and convenience, and thereby enhance trade volumes.
Cross-border trade infrastructure
The brief describes connectivity as a major pillar of bilateral cooperation and says road, inland water and port connectivity have expanded. Inland waterways cooperation under the Protocol on Inland Waterways Trade and Transit (PIWTT) facilitates trade and transit movement. The operationalisation of the Agreement on the use of Chattogram and Mongla Ports is aimed at improving connectivity with India's North-East.
Eight Integrated Check Posts (ICPs) and 31 Land Custom Stations are currently operational along the border, with additional ICPs under planning.
Power and energy
The brief describes power and energy as one of the crucial pillars of the relationship. Bangladesh is currently importing 1160 MW of power from India on a G-G basis. The Maitree Super Thermal Power Plant, a 1320 MW power plant built in Khulna with Indian assistance, is operational and supplies electricity to the Bangladesh grid.
India, Nepal and Bangladesh signed a trilateral agreement in October 2024 to export 40 MW of electricity from Nepal to Bangladesh through India's power grid. This trilateral power transaction was inaugurated on 15 November 2024, and the actual transmission of 40 MW of hydro-power started from 15 June 2025.
The India-Bangladesh Friendship Pipeline, which carries High Speed Diesel from India into Bangladesh, was virtually inaugurated on 18 March 2023. The brief states that it has contributed significantly to addressing Bangladesh's energy security.