Indian EZ in Mirsarai: Bangladesh for allowing local contractors
The establishment of an Indian Economic Zone in Mirsarai of Chattogram, aimed at attracting Indian investment by developing infrastructure on 900 acres of land, has encountered significant delays due to policy complications.
The $115 million project, funded under India’s third line of credit, restricts project work to Indian contractors—a provision Bangladesh is now urging India to revise.
Policy change request
The Bangladesh government, through the Economic Relations Department (ERD), has formally requested India to allow Bangladeshi contractors to participate in the project. A letter was sent to the Indian authorities seeking a policy amendment, but no response has been received yet.
Md. Mokhlesur Rahman, the project director, confirmed the appeal: ”We have asked the Indian government to allow Bangladeshi contractors to work alongside Indian contractors. Without this, the project could face further delays."
Indian contractors opt out
The project faced a major setback when two pre-qualified Indian contractors, Adani Ports and Special Economic Zone Limited and International Seaport Dredging Private Limited, expressed their inability to submit tenders by the February 28, 2024, deadline. This has forced the Bangladesh Economic Zones Authority (BEZA) to consider re-tendering.
BEZA officials have suggested an open tender process involving both Indian and Bangladeshi contractors to ensure the project’s completion.
"Without suitable contractors, the project cannot move forward. Allowing Bangladeshi contractors to participate is crucial," said a BEZA source.
Project progress and financial constraints
Originally approved in April 2019 with an expected completion date of June 2021, the project’s timeline has been extended to June 2025 due to delays. The project cost, approved at Tk 919.85 crore, includes Tk 5.26 crore from the government of Bangladesh and Tk 914.59 crore in project assistance.
As of October 2024, the total expenditure stands at Tk 6.1 crore, with the majority funded by the GoB. However, the lack of progress has caused operational challenges, including unpaid salaries for project staff.
Line of credit conditions
Under India’s line of credit terms, 85% of goods and services must be procured from Indian sources, though this can be relaxed to 50% in special cases. Bangladesh has requested further relaxation to allow up to 10% of goods/services to be sourced locally, emphasizing the urgency of resolving these policy constraints.
Despite these appeals, India has yet to respond.
Potential alternatives
If Indian authorities fail to address these concerns, BEZA may explore alternative funding or implementation strategies. A senior BEZA official suggested: “If India cannot provide contractors or allow Bangladeshi participation, the contract may need to be canceled, and domestic funding should be considered."
Delays and frustrations
The project director emphasized the complications arising from the restrictive conditions: "Indian contractors face difficulties due to procurement rules. We need flexibility for both Indian and Bangladeshi contractors to ensure progress."
With unresolved policy issues and contractor shortages, the Indian Economic Zone project in Mirsarai remains stalled. Bangladesh's push for policy changes reflects the urgency to complete the project while ensuring fair participation for local contractors. If no resolution is reached, alternative implementation strategies may become inevitable.
