Bangladesh: China to build drone factory in Chittagong; Muhammad Yunus, Xi Jinping deals big jolt to India

Dhaka: The Bangladesh government under Muhammad Yunus, deeply entrenched in its anti-India stance, has struck a deal with China that could alter the strategic landscape of South Asia. This deal involves the establishment of a drone manufacturing facility in the Chittagong district. Significantly, this area was previously earmarked for Indian industry, but the Yunus government cancelled the agreement.

When was the agreement signed?

According to reports, the agreement was signed in January of this year between the Bangladesh Air Force and the Chinese state-owned defense company, China Electronics Technology Group Corporation International.

Under the agreement, a facility will be built in the Chittagong district to manufacture and assemble state-of-the-art unmanned aerial vehicles (UAVs) for both military and civilian use. This deal is clear evidence of China's growing influence in India's neighborhood.

Was the site previously offered to India?

This deal is a direct blow to India, as the site where the drone facility is now planned was previously intended to become a special economic zone for India. In 2015, under a memorandum of understanding, Dhaka had allocated over 1,000 acres of land to Indian firms. However, New Delhi remained inactive for years, and the Yunus government, which succeeded Sheikh Hasina's administration, terminated the project. The allocation of the Indian zone was also revoked in early 2026.

An analysis of official statements from Bangladesh reveals that Dhaka has described this project as a step towards self-reliance. Under the agreement, China will provide infrastructure development as well as technology transfer. The agreement was signed at the Bangladesh Air Force headquarters in Dhaka Cantonment.

What is the significance for Bangladesh-China relations?

This agreement adds a new dimension to defense relations between China and Bangladesh. China has already been a major supplier of defense hardware to Bangladesh. Now, Bangladesh is finalizing a US$2.2 billion deal to purchase China's J-10C multirole fighter jets to enhance its capabilities.

What does this drone factory mean for India?

For India, this is much more than just a factory. China is already involved in Bangladesh's defense industry, supplying everything from submarines to radar systems. Beijing has helped build a submarine base near Cox's Bazar. The presence of Chinese submarines there is a cause for concern for India's Andaman and Nicobar Command.

In this context, the supply of drones and technology transfer signals a deeper penetration that could have long-term implications. India's relations with Bangladesh have been strained since Sheikh Hasina’s departure from power. Meanwhile, China's growing presence will only increase New Delhi's anxieties.