DELTA DISPATCH
Delta Geoeconomics Program

Japan's Bangladesh Paradox: Investments for India's Benefit?

Inqilab Delta Forum | Delta Geoeconomics Program | December 25, 2025

Key Findings

  • Japan has invested $80+ billion in India vs $15 billion in Bangladesh — Tokyo’s Quad partnership drives massive India-first investment: $68 billion pledged over next decade, $17 billion bullet train, $23.5 billion in metro systems
  • Matarbari Port designed for India’s landlocked Northeast — Japan’s $4.6 billion project sits just 100 km from India’s “Seven Sisters” states, explicitly framed as “connecting Kolkata and Dhaka”
  • India’s “Chicken’s Neck” vulnerability drives Japan’s Bangladesh strategy — The 22 km Siliguri Corridor is India’s only land link to 40 million Northeast Indians; Bangladesh transit cuts distance from 1,600 km to 200 km
  • FOIP prioritizes “Bay of Bengal-Northeast India value chain” — In Japan’s Free and Open Indo-Pacific strategy, Bangladesh provides connection, not destination
  • 2025 exposes Japan’s India bet as risky — Trump’s 50% tariffs on India, Operation Sindoor humiliation, and India-US trade crisis reveal Japan’s Quad anchor is unstable

The Investment Paradox

On October 18, 2024, Japan’s Ambassador to Bangladesh Iwama Kiminori met with Chief Adviser Muhammad Yunus to discuss the future of bilateral cooperation. At stake: over $15 billion in cumulative Japanese development assistance, including the flagship $4.6 billion Matarbari Deep Sea Port project. The meeting came amid Japanese concerns about whether a more independent Bangladesh would continue to serve Tokyo’s India-connectivity objectives.

Japan is one of Bangladesh’s largest development partners. As Dr. Pankaj Jha, Professor at Jindal School of International Affairs, noted in a November 2024 analysis: “Japanese investment in Bangladesh has always been embedded within the broader India-Japan strategic partnership framework.” Tokyo has committed billions in loans and grants for infrastructure, energy, and industrial development. By any measure, Japanese investment in Bangladesh is substantial and growing.

Yet there is a paradox embedded in this relationship: Japan’s strategic framework conceptualizes Bangladesh not as a destination but as a transit route — infrastructure serving India’s connectivity needs rather than Bangladesh’s development priorities.

Understanding this paradox is essential for Bangladesh to maximize the benefits of Japanese investment while avoiding subordination to India-centric development patterns.

Japan’s Quad-Driven India Obsession

Before examining how Japan views Bangladesh, we must understand the scale of Japan’s India investment — and why the Quad partnership drives this asymmetry.

The Investment Gap

Recipient Cumulative Japanese Investment Key Projects
India $80+ billion ODA loans $17B bullet train, $23.5B metro systems, Mumbai sea bridge
Bangladesh $15 billion ODA $4.6B Matarbari port, roads, power

Japan has pledged an additional ¥10 trillion (~$68 billion) to India over the next decade. In FY2024/25 alone, JICA signed ¥275,997 million in new ODA agreements with India.

The Quad Logic

Japan’s India-first approach is driven by the Quad framework:

  1. China Containment: India positioned as the land-based counterweight to Chinese expansion
  2. Belt and Road Competition: Japan’s Quality Infrastructure Investment counters BRI through India
  3. Defense Market: India is Japan’s largest South Asian defense customer
  4. Strategic Anchor: The “Special Strategic and Global Partnership” makes India the FOIP linchpin

As the Heritage Foundation noted: “The outcome of India-Japan cooperation in South Asia will influence the Quad’s ability to effectively counter China.”

The 2025 Reality Check

However, 2025 has exposed the fragility of Japan’s India bet:

Japan now faces a question: if India is an unreliable Quad partner that cannot manage its own regional conflicts without US intervention, why is Tokyo designing Bangladesh’s infrastructure primarily to serve Indian interests?

The Connectivity Framework

Japan’s approach to Bangladesh is explicitly framed within India connectivity concepts:

The Bay of Bengal Industrial Growth Belt (BIG-B)

Launched in 2014, BIG-B aims to develop Bangladesh’s industrial corridor with Japanese investment. But the strategic logic centers on India:

The Industrial Value Chain Concept

Japan’s “Industrial Value Chain Concept Connecting Bay of Bengal and Northeast India” makes the framework explicit. The name itself reveals the priority: Bangladesh is the connection between Bay of Bengal and Northeast India — not an endpoint.

This concept envisions:

FOIP and the Value Chain

Japan’s Free and Open Indo-Pacific (FOIP) strategy explicitly references the “Bay of Bengal-Northeast India value chain” as a priority. Bangladesh features as geography enabling this value chain — not as a strategic partner in its own right.

The Matarbari Case Study

The Matarbari Deep Sea Port project illustrates the connectivity logic in practice.

The Investment

The Framing

Japan has explicitly described Matarbari’s purpose as serving regional connectivity. Official Japanese statements describe the project as:

“Creating an economic zone of 300 million people by connecting Kolkata and Dhaka with Matarbari Port.”

Note the framing: the port connects Kolkata and Dhaka. Bangladesh is one node in a network; India (Kolkata) is the other. The “300 million people” economic zone prioritizes cross-border integration over Bangladesh’s independent development.

The Connectivity Design

Matarbari’s location and design reinforce the India-connectivity logic:

The port will certainly benefit Bangladesh. But its strategic design prioritizes regional connectivity over purely national development priorities.

The Northeast India Obsession: The Real Driver

India’s seven northeastern states — the “Seven Sisters” plus Sikkim — represent India’s most acute geographic vulnerability. Understanding this vulnerability explains why Japan designs Bangladesh infrastructure primarily for Indian access.

The Chicken’s Neck Problem

The Siliguri Corridor is a narrow strip of land only 22 kilometers wide at its narrowest point. It is:

The Distance Differential

Route Distance
Agartala to Kolkata via Siliguri 1,600 km
Agartala to Kolkata via Bangladesh 450-600 km
Agartala to Chittagong Port 200 km

As the World Bank noted: “The North East region sits at the doorstep of Eastern Asia… Goods from Agartala in Tripura have to travel 1,600 km through the Siliguri corridor to reach Kolkata Port instead of just 450 km through Bangladesh.”

Matarbari’s True Purpose

Japan’s Matarbari Deep Sea Port is located just 100 km from India’s Northeast. This is not coincidence — it is strategic design:

“A mega deep-sea port at Matarbari… will be a trade gateway for northeast India, which would be less than 100 kilometers from the massive port facility.”

Japan’s Bangladesh investment strategy is substantially oriented toward solving India’s Northeast problem:

Transit Routes

Japanese-funded infrastructure in Bangladesh is designed to provide alternative transit routes for India’s northeast:

Economic Integration

Japanese industrial investments aim to create cross-border value chains:

Strategic Rationale

For Japan, solving India’s northeast connectivity problem serves broader strategic interests:

Bangladesh’s development benefits are a byproduct, not the primary objective.

The Hasina Era Alignment

Sheikh Hasina’s government (2009-2024) reinforced the India-connectivity framework. Her administration:

Embraced the Transit Role

Bangladesh under Hasina actively marketed itself as a connectivity solution for India:

Subordinated National Interest

Critical infrastructure decisions reflected India-connectivity priorities over national development needs:

Guaranteed Strategic Alignment

The India-aligned government provided Japan with confidence that investments would serve intended purposes:

The Post-August 2024 Disruption

The fall of Sheikh Hasina creates both challenges and opportunities for Japan-Bangladesh relations.

The Challenge

Japan’s investment logic assumed India-aligned Bangladesh. A more independent Bangladesh raises questions:

  1. Will transit agreements continue? A government asserting sovereignty may restrict Indian access
  2. Will infrastructure serve intended purposes? Ports designed for India connectivity may prioritize national interests
  3. Will political stability persist? Democratic transition creates uncertainty

These questions may dampen Japanese investment enthusiasm.

The Opportunity

However, the new dynamic also creates opportunity for Bangladesh to reframe the relationship:

  1. Bilateral Partnership: Engage Japan as partner in Bangladesh development, not merely India connectivity
  2. National Priority Alignment: Ensure Japanese investments serve Bangladeshi development objectives
  3. Leverage Competition: Use Japan-China competition to extract better terms
  4. Technology Transfer: Demand capability building, not just infrastructure construction

Reframing the Relationship

Bangladesh can leverage Japanese investment for national benefit by reframing the relationship:

From Transit to Destination

Bangladesh should position itself as a development destination, not merely transit infrastructure:

From Connectivity to Partnership

Engagement should be bilateral partnership, not triangulated through India:

From Infrastructure to Capability

Japanese investment should build national capability:

What Japan Offers Beyond India Connectivity

Japan remains a valuable partner when the relationship is properly framed:

Technology and Quality

Japanese investment brings:

Alternative to China

Japan provides development partnership without Belt and Road conditions:

Market Access

Japan offers:

Strategic Diversification

Japan partnership enables:

The Path Forward

Bangladesh should pursue a reframed Japan relationship:

Strategic Dialogue

Initiate Bangladesh-Japan strategic consultations at senior levels:

Investment Reframing

Negotiate investment terms that serve Bangladeshi priorities:

Bilateral Agreements

Seek agreements framed bilaterally, not as India connectivity:

Selective Connectivity

Accept connectivity investments that serve Bangladeshi interests:

The Stakes

The outcome of Japan-Bangladesh relationship reframing matters significantly:

If reframing succeeds:

If India-connectivity logic persists:

Conclusion: Investment Without Subordination

Japanese investment in Bangladesh is substantial and valuable. But the strategic framework that guides this investment — the India-connectivity logic — subordinates Bangladeshi interests to regional integration serving Indian needs.

The post-August 2024 moment offers Bangladesh an opportunity to reframe the relationship. Japan wants a Bangladesh partner; the question is whether that partnership serves Bangladeshi development or merely Indian connectivity.

Bangladesh need not reject Japanese investment or India connectivity. But it must ensure that investments serve national development priorities, that connectivity arrangements are equitable, and that the relationship is bilateral partnership rather than triangulated subordination.

Japanese investment should develop Bangladesh — not merely transit through it.

The Bottom Line

Japan’s strategic framework explicitly conceptualizes Bangladesh as India connectivity infrastructure — the “Bay of Bengal-Northeast India value chain” treats Bangladesh as transit, not destination. Matarbari Port is designed to “connect Kolkata and Dhaka,” serving India’s landlocked northeast. The fall of Sheikh Hasina creates an opportunity to reframe Japanese investment as bilateral partnership serving Bangladeshi development priorities. Japan remains a valuable partner, but Bangladesh must ensure investments build national capability rather than merely enabling Indian access.

This Delta Dispatch represents the analysis of the Inqilab Delta Forum research team.

Sources:

  1. Japan International Cooperation Agency, “Bay of Bengal Industrial Growth Belt (BIG-B) Initiative,” Project Documentation, 2024.
  2. Ministry of Foreign Affairs of Japan, “Free and Open Indo-Pacific,” Policy Papers, 2024.
  3. JICA, “Matarbari Ultra Super Critical Coal-Fired Power Project,” Project Brief, 2023.
  4. JICA Press Release, “ODA Loan Agreements with India FY2024/25,” March 2025.
  5. World Bank, “Bangladesh Corridor Vital to India’s ‘Act East’ Policy,” September 2017.
  6. Business Standard, “Beyond the Bullet Train: Japan’s Expanding Role in India’s Infrastructure,” September 2025.
  7. WION News, “Japan’s FOIP Plan Focuses on Bangladesh’s Matarbari Port,” March 2024.
  8. Observer Research Foundation, “Japan-India-Bangladesh Trilateral Dynamics,” ORF Occasional Paper, 2024.
  9. East Asia Forum, “Strained India-US Relations Under Trump 2.0 Test India’s Strategic Autonomy,” December 2025.
  10. Foreign Policy, “India’s Strategic Autonomy Doesn’t Work in a Great Power World,” November 2025.
  11. Wikipedia, “Siliguri Corridor,” accessed December 2025.
  12. Sasakawa Peace Foundation, “National Seminar on Bangladesh’s First Deep Seaport: Matarbari,” May 2024.

Related Analysis:

Δ

Inqilab Delta Forum

Delta Geoeconomics Program

Japan Relations Foreign Investment Infrastructure India Relations Economic Policy Geopolitics

Related Analysis