Introduction

As the Indo-Pacific increasingly becomes a theatre of geopolitical contestation, the Bay of Bengal is gaining greater attention as the hinge between the Indian and Pacific Oceans. The region is home to important shipping lanes that channel vital cargo—especially energy—towards the Strait of Malacca, which is among the world’s most congested chokepoints.^[a],[1] A future marked by energy insecurity and shifting global-power dynamics has given rise to the scramble for an anchor in this maritime space, not only to protect uninterrupted energy flows but also to secure access to the Bay’s hydrocarbon reserves. Indeed, the Bay of Bengal is witnessing both competition and cooperation between states seeking greater influence in the region.^[2]

For India, a regional power in the Bay of Bengal region, this water body is vital for its economic and security interests. As the common maritime space between India and Southeast Asia, the Bay is pivotal to New Delhi’s foreign policy aspirations of forging stronger ties with its eastern neighbourhood and the wider Indo-Pacific Region via its Neighbourhood First and Act East policies.^[b],[3] The Bay is also important for India’s MAHASAGAR (Mutual and Holistic Advancement of Security and Growth Across Regions) initiative,^[c],[4] and for its goal of building an open, stable, and prosperous Indo-Pacific.^[5]

For China, meanwhile, the Bay of Bengal is not only a resource-rich maritime space with relatively untapped oil blocks, but also a gateway to the Indian Ocean, outlined by large market economies and intersected by vital trading routes.^[6]  However, China’s rise in this region is viewed as a threat to the status quo, with the potential to restrict India’s influence and prominence in its neighbourhood, which New Delhi considers a primary area of interest.^[7] Accordingly, India and China have emerged as competitors in the Bay of Bengal, with their activities ranging from competing economic investments in the Bay littorals^[d] to providing military assistance and engaging in collaborations in the development space.^[8]

India’s and China’s port development initiatives in the Bay of Bengal littoral countries are a manifestation of this competition. All the developing coastal states of the Bay of Bengal are highly dependent on overseas trade; therefore, high-efficiency port infrastructure is a necessity for all of them. As developing countries often lack the necessary resources or technical know-how, their ports are constructed with foreign assistance through developmental partnerships. For the investing country, ports are also entry points into a foreign market, with strategic potential to stimulate industrial development, secure trade and energy needs, and enhance naval capabilities.^[9] Engaging in port development is thus a mutually lucrative endeavour.

This paper has three objectives: to understand why the Bay of Bengal has emerged as a theatre for Sino-Indian competition; to analyse how port development can enhance the strategic interests of investing powers and their geopolitical consequences; and to assess the Sino-Indian competition in port development in the Bay littoral countries. The paper will explore the implications of this competition for India and recommend ways for it to retain its influence in this maritime space.

The Geopolitics of Interstate Competition in the Bay of Bengal

The Bay of Bengal’s history is marked by recurrent episodes of competition and conflict between global powers seeking to harness the potency of this maritime space for their economic prosperity. In the 18^th century, the Chola conquests against the Srivijayan empire to establish a ‘Chola Lake’ or a monopoly over the Bay’s trading routes were some of the earliest instances of interstate competition in these waters.^[10] Colonial history is replete with examples, such as the wars^[11] fought between the British and other colonial powers along the Indian east coast, to establish a ‘British Lake’: their supremacy in this commercially lucrative subcontinent and its adjoining seas.

In the current era, the Bay of Bengal has once again emerged as a zone of strategic rivalry between India and China.^[12] Three key physical features make the Bay of Bengal a zone of inter-state competition:

• Proximity to One of the World’s Busiest Chokepoints: The Bay is in proximity to the Strait of Malacca, one of the world’s “few narrow passages that play an outsized role in global commerce and security.”^[13] This Strait connects the Bay of Bengal and its adjoining Andaman Sea with the Pacific Ocean. Since the seventh century, it has been a lifeline for maritime trade, an ideal passage and area for transhipment, sheltered from the monsoon winds.^[14] Currently, nearly 30 percent of global trade passes through it.^[15] Control over the Bay of Bengal would enable a country to not only tap into this lucrative maritime trade but also monitor and obstruct shipping traffic.
  
  
• Strategically Located Islands: The Andaman and Nicobar Islands, bifurcating the Bay from the Andaman Sea, are often called “the most strategically located island chain in the world.”^[16] Not only is the island chain in proximity to the Strait of Malacca, but it also straddles three important shipping routes: the Duncan’s Passage, the Preparis Channel, and the Ten Degree Channel, and its southern tip is only eight nautical miles from the East-West Shipping route.^[17] Its possession allows any country to partake of the robust maritime trade passing through these routes, make economic gains by transforming it into a refuelling base, and even a naval base from which maritime traffic can be monitored. The island chain has thus been coveted by different states. It served as a naval base for the British during the colonial years. The Japanese captured it in 1942 and occupied it for three and a half years, until the Allied troops recaptured the islands in 1945.^[18]At present, the Andaman and Nicobar Islands house India’s far eastern Tri-Command, responsible for monitoring shipping traffic.
  
  Sri Lanka is the other strategic island state in the Bay, enjoying robust trade links with Europe, the Middle East, India, China, Southeast Asia, and the Far East. Its commercial capital, Colombo, with its coveted location and ability to accommodate large vessels, is a bustling seaport.^[19] The conquest of Sri Lanka (then called Ceylon) has been a key characteristic of colonial rivalry in the Bay. India and China are both seeking active cooperation with the island state to suit their maritime interests in the Bay and the Indian Ocean.^[20]

• Semi-enclosed Structure of the Bay: Due to the semi-enclosed structure of the Bay, its littorals are closer to one another with adjacent sovereign spaces and shared resources, heightening competition over its commercial prospects.^[21] China and India are keen on transforming the Bay into their own sphere of influence.

A study of China’s and India’s respective strategic interests in the Bay reveals that these geographical features continue to shape the geopolitics of this maritime space.

China’s Belt and Road Initiative and the Malacca Dilemma

According to geopolitics expert Robert Kaplan, “China is not a status quo power: for it is propelled abroad by the need to secure energy, metals, and strategic minerals to support the rising living standard of roughly a fifth of humanity… It is now under popular pressure …to provide a middle-class lifestyle for much of its urban population.”^[22] Indeed, as the second most populous country and the second-largest economy in the world, China needs to extend its influence beyond its geographic boundaries to fuel its survival and development. It does this through economic outreach rather than direct coercion.^[23]

Accordingly, Beijing has built advantageous power relationships in contiguous and distant territories rich in the very resources it requires to fuel its growth.^[24] This manifests in China’s flagship Belt and Road Initiative (BRI), launched in 2013 by President Xi Jinping. It is a global infrastructure development initiative that has broadened China’s economic and political influence by connecting it with participating nations and providing Beijing’s vast state-owned companies with an expanded market beyond its borders. In the process, there is a risk of these countries becoming dependent on the Chinese economy.^[25]

In the Bay of Bengal, Beijing’s interests are framed by the so-called “Malacca Dilemma”, an apprehension articulated by then Premier Hu Jintao in 2003.^[26] He noted that Beijing needed to find an alternative to secure its strategic vulnerability in the chokepoint, amidst concerns that “certain major powers” aimed to control it.^[27] Nearly 80 percent of China’s oil imports enter the South China Sea via the Strait of Malacca, and disruptions could disproportionately impact its survival and prosperity. Beijing relies on the deliveries expedited by the Strait of Malacca as its alternative routes, such as the Lombok Strait, increase costs by 20 percent.^[28] Therefore, any hindrance to freedom of passage through this chokepoint would present a worrisome economic and political scenario for China.^[29] However, as a nation facing the Pacific Ocean, it had no historical claims over this Strait and hence had to rely on other powers, such as the United States (US), to safeguard freedom of passage. As an aspiring great power, Beijing could not afford to be dependent, and thus decided not only to reduce its vulnerabilities but also to shape the regional strategic environment as a ‘maritime power’.^[30]

China’s quest for influence in the Indian Ocean is showcased in its attempts to connect Western China to the Arabian Sea via Pakistan, and to the Bay of Bengal via its littorals. The Bay is the closest water body to the Chinese landlocked western provinces of Yunnan and Tibet.^[31] Accordingly, it has undertaken multiple projects, including new roads, rail corridors, and trans-border energy pipelines under the BRI, to improve connectivity with this region. It has also developed new institutional mechanisms, such as the Bangladesh-China-India-Myanmar (BCIM) Initiative, to promote regional cooperation among China, Bangladesh, Myanmar, and India.^[32]

Beijing’s activities in the Bay of Bengal are anchored in its Maritime Silk Road (MSR), the sea leg of the BRI. Under its aegis, China attempted to overcome its Malacca Dilemma with the Kra Canal across the Isthmus of Kra in Thailand, which would provide an alternative to the Strait of Malacca, reducing shipping distances by approximately 1,200 nautical miles.^[33] This would save fuel costs, reduce transit times, and ease congestion within the chokepoint. Accordingly, in 2015, an MoU was signed between private entities from China and Thailand to explore the feasibility of the canal.^[34] However, the understanding faltered, possibly due to political sensitivities and opposition from other regional actors such as Singapore and India.^[35]

Nonetheless, Beijing moved to mitigate these concerns by deepening its foothold in the Bay through development partnerships with littoral states, notably via port development engagements.^[36] The MSR is designed to accommodate expanding maritime trade traffic, with China investing in a network of ports along the Indian Ocean, from Southeast Asia to East Africa and parts of Europe.^[37] As there is a shortage of infrastructure investment to meet the needs of developing nations, the Bay littorals have welcomed Chinese funding. However, mounting doubts surround both the commercial viability and strategic intent of these projects—including whether they allow Beijing to wield disproportionate influence over recipients’ domestic and foreign policies.^[38] This is at the core of Sino-Indian maritime competition in the Bay.

India’s Apprehensions of China, ‘Neighbourhood First’, and ‘Act East’

India is a “geographic wedge puncturing the grand sphere of China’s influence.”^[39] China sees no reason for India’s presumed claims of primacy in the Indian Ocean and is determined to pursue its own economic and political interests in the Indian Ocean Region (IOR) littorals. The Bay of Bengal is the epicentre of India’s vision of the Indo-Pacific, due to its strategic attributes and its geographic position near the confluence of the Indian and Pacific Oceans. More than 42 percent of India’s trade is conducted through this sea, and it has vital hydrocarbon reserves in its depths. The natural resources in the Bay feed its population and contribute to its economy. Moreover, security concerns in the Bay can also challenge the country’s state and human security. As it is the common maritime space between India and Southeast Asia, it is vital for realising India’s Act East policy and its Indo-Pacific vision, both of which uphold ASEAN (Association of Southeast Asian Nations) centrality.

Maritime security in the Bay is thus essential for ascertaining India’s economic, energy, and food security, as well as its foreign policy aspirations. Ensuring a secure Bay will help India contribute towards greater stability in the Indo-Pacific and, in turn, favour its ambitions.

As Beijing focuses on building vertical corridors linking south-western China with the Bay, New Delhi is developing horizontal connectivity with its eastern neighbourhood. While India initially did not lodge any formal objections to Beijing’s BRI, the lack of a transparent process and increasing mistrust affected India’s decision on the project. It is apprehensive of unsustainable debt burdens that China can place on the Bay littorals to seize control of regional choke points.^[40] As Indian Foreign Minister S. Jaishankar put it, “We cannot be impervious to the reality that others may see connectivity as an exercise in hard-wiring that influences choice.”^[41]

India inherited the British legacy of a dominant role in the IOR. The world’s fourth-largest economy^[42] envisions itself as the “net security provider of the region”, ensuring stability, peace, and maritime security in its neighbourhood, particularly the IOR. Beijing is a serious contender in its area of influence.^[43] New Delhi faces an environment where it needs to reinstate its prominence in South Asia and the IOR. Before the BRI, New Delhi did not view its bilateral ties with neighbours as threatened—its partnerships with other donors, such as Japan, lacked this overt competitive edge. China’s rise has sharpened India’s concern that Beijing’s expanding footprint could erode New Delhi’s regional primacy. The former’s diplomatic outreach reflects great-power ambitions: like many rising powers, it questions the existing order and seeks to reshape it. Such a shift, if favourable to China, would carry consequences for India’s interests.^[44]

However, as China’s involvement in the region increases, New Delhi is acutely aware of security shifts wrought in its environment by Beijing. It is thus intent on re-evaluating its ties with its neighbourhood to counter-balance measures.^[45] India’s growing commercial engagement with its eastern neighbours has further raised its stakes to protect the Bay. Port development, with its substantial strategic possibilities, has emerged as a unique domain of Beijing-New Delhi’s interstate competition in the Bay of Bengal.

Ports as Strategic Assets

Maritime transport is the backbone of global commerce, with more than 80 percent of goods transported by sea.^[46] High-efficiency port infrastructure is thus a necessity in most countries, especially coastal and island nations, such as the Bay littoral states. However, investing in port development has only recently been made possible with the privatisation of port operations. Following the global wave of port reforms, nearly 80 percent of port authorities across the world adopted the “landlord port model”, limiting themselves to public roles and leaving cargo handling activities to private actors.^[47] Consequently, global terminal operators emerged as firms specialised in cargo handling. As many of these companies are backed by state governments, the privatisation of port functions and the need for new ports, especially in developing economies, allowed countries to invest in foreign port developments. For the investing country, port development projects can be attractive for three reasons.^[48]

1. Channelling domestic saturation. When a country’s local investment opportunities become saturated with sufficient port infrastructure already in place, it channels its domestic overcapacity into investments for port development abroad. Such initiatives help strengthen trade ties with the host nation and enhance the investing country’s geopolitical influence and soft power, thereby supporting strategic objectives.^[49]

2. Need for greater influence over supply chains. Given that ports serve as critical nodes in the global network of supply chains, control over these translates into decision-making power regarding vessel prioritisation. In strategic terms, this control enhances a country’s influence over supply chains, including those vital to energy security and fundamental requirements. During times of conflict, this influence can also be exercised to block or restrict access to certain ships, reinforcing the geopolitical significance of ports within the broader framework of shipping routes.^[50]

3. The dual usability of ports. While the roles of naval and commercial ports were historically seen as conflicting, often with large naval bases displacing commercial activities, as seen in places like Plymouth (UK) and Toulon (France), there is a growing trend toward integration. This convergence has led to mixed-use ports accommodating economic and strategic objectives. Although combat operations require extensive logistical and support infrastructure that typically exceeds the capacity of commercial ports, these facilities can still play important roles. Commercial ports need not be fully developed naval bases to serve security purposes such as refuelling, provisioning, and ship repair. Moreover, sensitive infrastructure, such as communication systems, radars, and weapons platforms, can be installed without a dedicated military base.^[51]

Given these strategic possibilities, countries engage in port development in the following ways:

• Operating container terminals. This involves a range of activities, including cargo handling, passenger services, receiving and storing goods, managing the loading and unloading of ships, and ensuring efficient transfer of cargo to other modes of transport. Private firms operate most container terminals, but there are also state-backed enterprises with strategic and commercial motivations. China has state-owned enterprises operating container terminals, such as Cosco and China Merchants Port Holdings (CMPH), that are closely aligned with its BRI. Local governments, such as the Shanghai International Port Group, own some other terminal operators.^[52]

India Ports Global Ltd. (IPGL), launched in 2015 to run foreign ports of strategic value, is the Indian government’s overseas port operator. In 2018, it became a wholly owned subsidiary of the Sagarmala Development Corporation Ltd, to align its domestic port-modernisation expertise with its overseas port operations in service of strategic goals. In February 2025, Bharat Ports Global, a consortium of state-run port ventures, was formed to bid for international opportunities and increase India’s heft in the global maritime economy.^[53] Among private enterprises, India’s Adani Ports and Special Economic Zone Ltd (APSEZ) operates the West Container Terminal (WCT) at the Colombo Port. It is the first deep-water terminal to be fully automated, designed to enhance cargo handling capabilities and elevate the port's status as a key transhipment hub in South Asia.^[54]

• Providing financial assistance. Some countries have national development banks, sovereign wealth funds, or other vehicles to invest in strategic ventures. For example, China funds foreign port projects via national development banks. It has also initiated the Silk Road Fund to finance projects that are part of the BRI. Additionally, Beijing has created a new multilateral development bank, the Asian Infrastructure Investment Bank, to finance port projects along the New Silk Road.^[55] Funding can also be given as developmental assistance, such as China’s proposal for China Harbour Engineering Company (CHEC) to repair Sri Lanka’s Hambantota fisheries port after the 2004 tsunami, which later evolved into full-scale port projects financed and built by Beijing. Such financing typically comes with conditions, such as construction by firms from the lending nation; the port’s control gets transferred if the host country defaults on repayments; and loans are repaid in kind—for example, China Exim Bank’s loan for Equatorial Guinea’s Port of Bata will be repaid in oil. Often, these banks fund Chinese state-owned companies directly, bypassing the host government.^[56]

Development assistance in the form of concessional Lines of Credit (LoCs) is also extended by the Government of India under the Indian Development and Economic Assistance Scheme (IDEAS) through the Exim Bank of India. In total, more than 300 LoCs worth US$32 billion have been extended to 68 countries.^[57] These cover around 600 projects ranging from railways, roads, agriculture, industry, airports, and ports to hospitals, disaster management, hydroelectricity, power transmission and Information Technology. Till August 2024, India had extended LoCs worth US$7.862 billion to Bangladesh, more than US$2 billion to Sri Lanka, and US$745 million to Myanmar.^[58] There is a focus on regional connectivity initiatives in the neighbourhood as these can act as force multipliers to accelerate regional growth and development, promote people-to-people contact, and encourage trade and commerce.^[59]

• Port construction. Foreign states can also be involved in port development through state-owned construction companies, such as the CHEC and China Communications Construction Company (CCCC). Most constructions by these companies are financed by a Chinese state-owned bank, China Exim Bank, followed by a Chinese state-owned terminal operator, e.g., CMPH. State-owned enterprises involved in port construction often link these ports to their hinterlands: e.g., the CCCC currently has hinterland corridor projects in Africa.^[60]

As regards India, the Indian Ports Global Limited  is developing facilities at Bangladesh's Mongla Port and Myanmar’s Sittwe Port.^[61]  This is part of India's broader strategy to enhance its global maritime presence and connectivity.^[62] India has also agreed to sponsor the renovation of the Kankesanthurai (KKS) Port, with a grant of US$61.5 million covering the entire project. Situated near Jaffna, Sri Lanka, the KKS Port is located 104 km from the Karaikal Port in Pondicherry. The direct passenger ship service connecting Nagapattinam in Tamil Nadu to the KKS Port covers a distance of 111 km (60 nautical miles) in three and a half hours.^[63]

• Port services and equipment. States can become involved in foreign ports by providing port services and equipment, e.g., dredging, towage services, and port equipment, through state-owned enterprises. The Chinese port equipment manufacturer Shanghai Zhenhua Heavy Industry Co., Ltd. (ZPMC) is a subsidiary of the state-owned CCCC.^[64] Since 2010, China has given container-screening equipment to developing countries.^[65] India also provides services and equipment to foreign ports. In 2017, the Dredging Corporation of India executed contracts in the Prassur Channel of Bangladesh’s Mongla Port^[66] and in 2024, it supplied port equipment to Iran’s Chabahar Port.^[67] However, these are piecemeal initiatives and are not part of a larger strategic programme or initiative.

• ‘Green port’ development. As the world becomes more aware of the impacts of climate change, ‘green port’ building initiatives are gaining popularity. This involves the use of sustainable technologies and practices, such as renewable or green fuels in port operations and improving waste management, to achieve more eco-friendly port operations. China has signalled a “green BRI” since 2019,^[68] and in 2021, Xi pledged to halt new overseas coal plants. However, there is no single, BRI-wide green-port program yet, and fossil projects still appear in the portfolio.^[69] India adopted the ‘Harit Sagar’ or the Green Port guidelines for its Major Ports in 2023,^[70] but there are no records of its implementation in foreign port development projects. Therefore, as nations prioritise climate-resilient port development and stricter environmental standards, both countries need to revisit their foreign port development initiatives and engineer a green shift to remain relevant.

While port development initiatives are on the rise, several countries have also adopted screening mechanisms for foreign direct investment in ports. These may include legal caps on foreign ownership and requirements for joint ventures with local entities. China maintained such restrictions until the early 2000s, and although these have been formally lifted, no foreign operator currently holds a majority stake in a Chinese terminal.^[71]

China, under its MSR initiative, has envisaged a system of linked ports, infrastructure projects, and special economic zones (SEZs) to develop new production and distribution chains across the region, placing itself at the core.^[72] It has invested in developing ports along the Bay’s coastline, binding the Bay of Bengal closer to the Chinese economy and facilitating Beijing’s efforts to break out of its East Asian mould and ensure a more tangible presence in the Indian Ocean region. Even though Beijing insists on having purely commercial interests in its engagement in these ports, India is apprehensive of a latent security threat to its influence in the neighbouring waters.^[73] New Delhi has felt the need to invest in port development beyond its own ports along the Bay’s western coast, to not only provide an alternative to Chinese investments but also to strengthen its own influence in the region. India is currently the only country in the Bay of Bengal region to develop and operate ports in the other littorals via bilateral partnerships.

The following section studies China's and India’s port development initiatives in Sri Lanka, Bangladesh, and Myanmar.

Sino-Indian Competitive Port Development in the Bay of Bengal

The term “string of pearls” was coined in a 2005 report titled ‘Energy Futures in Asia’, commissioned by the US Department of Defense^[74] and prepared by the consulting firm Booz Allen Hamilton. The phrase describes China’s strategy of developing a network of commercial and military facilities and relationships along Sea Lines of Communication, which extend from the Chinese mainland to Port Sudan in the Horn of Africa. These ‘pearls’ are strategic locations: ports, airfields, and infrastructure developments in the Indian Ocean littorals.

Although India does not officially subscribe to the theory, it views such developments with concern, prompting counter-measures. These initiatives, initially a reaction to Beijing’s growing footprint, now encapsulate India’s vision of carving a niche for its influence as a power in its neighbourhood. Accordingly, it has extended its Sagarmala Initiative for port-led growth to formulate the Maritime India Vision 2030 (MIV 2030), a blueprint to ensure coordinated and accelerated growth of India’s maritime sector for the next decade.^[75]

Sri Lanka: From a Pro-China Tilt to a More Balanced Outlook

Sri Lanka is situated at the centre of key SLOCs.^[76] Its maritime outreach is not limited to the Bay of Bengal, as indeed much of the country’s trade viability rests on the Strait of Malacca. However, the Bay’s commercial value for Colombo is elevated as it serves as the transhipment hub for the surrounding littorals. Sri Lanka also depends on the Palk Strait and the Gulf of Mannar—located within the Bay—for fishing, with nearly one million people engaged in the fisheries sector on a full- or part-time basis.^[77] Maritime order and security are thus cardinal to Sri Lanka, as demonstrated by the adoption of the third UNCLOS during its Chairmanship of the UN Conference on the Law of the Sea in 1973.^[78]

Sri Lanka does not have an Indo-Pacific policy but supports the idea of a free and open Indo-Pacific region. It also conducts joint military exercises with both China and India.^[79] Although Sri Lanka has historically maintained a non-aligned foreign policy, China expanded its strategic ties with the country during the rule of pro-Beijing leader Mahinda Rajapaksa, his brother Gotabaya Rajapaksa, and Ranil Wickramasinghe. It was Wickramasinghe who signed the 99-year lease for the Hambantota port in a debt swap, and the Colombo Port City project was implemented during the tenure of Mahinda Rajapaksa The government of President Anura Kumara Dissanayake, in power since September 2024, is maintaining a balance in its engagements with Beijing and New Delhi.^[80] The Sino-Indian competition in its ports manifests as follows.

Hambantota Port: Between 2007 and 2012, then Sri Lankan President Rajapaksa secured loans worth over US$1 billion from China’s Exim Bank to finance the construction of the Hambantota port despite widespread doubts about the project’s profitability. Although the country had approached other potential creditors, including India and the Asian Development Bank (ADB), it failed to secure financing due to concerns over the port’s viability. China offered loans at much higher interest rates of around 6.3 percent, compared to the 3 percent the ADB would have charged. However, upon completion, the port failed to generate sufficient revenue, confirming earlier concerns. With Rajapaksa out of office by 2017, the Sri Lankan government leased a majority stake in the port to the state-owned CMPH for 99 years, receiving US$1.12 billion to pay off other creditors. Its debt to China remained largely unchanged.^[81] Thus, the Hambantota Port is cited as an example of Chinese "debt-trap diplomacy"^[82] as critics argue that China deliberately extended excessive loans for the project—knowing that Sri Lanka would struggle to repay them—to gain control over one of the most critical ports in the IOR. However, other analysts argue that this is an oversimplification.^[83] They note that the port was a Sri Lankan initiative, and the debt was not solely owed to China. Moreover, the lease did not involve a debt-for-equity swap, and the Sri Lankan government retains sovereignty over the port. Still, in the study of Chinese lending patterns, the Hambantota case remains emblematic of the risks with the BRI.^[84]

In January 2025, President Anura Kumara Dissanayake signed a deal worth US$3.7 billion with China for constructing an oil refinery in the Hambantota port. The Sri Lankan presidency maintains that the refinery will be export-oriented, with a capacity of 200,000 barrels, and will uplift the livelihoods of low-income communities in the Hambantota area. However, apprehensions framed by the ‘string of pearls’ theory observe that the refinery could be part of the same Chinese project designed to gain the strategic upper hand in the IOR. Sri Lanka selected China to construct the refinery after scrapping a 2019 contract with an Indian-Omani group in 2023. Had this deal, worth US$3.85 billion, not been cancelled, it would have surpassed China’s investment.^[85]

Colombo Port: China has expanded its presence in Sri Lanka’s port infrastructure, securing a Build-Operate-Transfer (BOT) agreement for a warehousing hub within the Colombo Port's transhipment centre for the Bay of Bengal. The CMPH will hold an 85-percent stake in the US$392-million project and operate it for 50 years. This adds to CMPH’s existing 85-percent stake in the Colombo International Container Terminal (CICT) and its 85-percent stake and 99-year lease on Hambantota Port, bringing total Chinese port investments in Sri Lanka to over US$2 billion. The CHEC is also involved in constructing the Eastern Container Terminal (ECT) in collaboration with Access Engineering Ltd. and the Sri Lanka Ports Authority (SLPA).^[86]

These developments carry strategic implications, especially for India, which relies on the Colombo port for 60 percent of its transhipment cargo. The country has long viewed Sri Lanka as a node in its maritime security, with the 1987 India-Sri Lanka Accord warning against the use of Sri Lankan ports by forces hostile to India.^[87] India’s concerns escalated when the Mahinda Rajapaksa government handed over the CICT project to China in 2011, sparking a regional strategic recalibration. In response, India and Japan pushed for joint control of the East Container Terminal (ECT) at the Port of Colombo to counterbalance China. However, President Gotabaya Rajapaksa later reneged on this agreement, citing electoral promises against foreign ownership. To appease India, Sri Lanka awarded the West Container Terminal (WCT) project to India’s Adani Group—but with only a 51-percent stake, much less than China’s 85 percent in CICT. This uneven playing field deepened India’s unease over China’s expanding influence under successive Rajapaksa administrations. New Delhi viewed it as overtly pro-China and dismissive of Indian strategic interests.^[88]

Trincomalee Port: Trincomalee has long held strategic and commercial significance, from its prominence during Sri Lanka’s Polonnaruwa era (1055–1232 CE) to its establishment as a key port by colonial powers in the 18^th century. Indian historian-diplomat K.M. Panikkar also emphasised its importance for India’s maritime defence in the 1940s, which highlights the recognition of the port’s significance in early Indian strategic thinking.^[89] Today, although its port infrastructure remains underdeveloped, efforts are underway to modernise it. Former President Ranil Wickremesinghe envisioned Trincomalee as an energy hub in collaboration with India, starting with a 100-MW solar plant in Sampur. While Colombo remains Sri Lanka’s primary port due to its advanced infrastructure and economic clout, Trincomalee is seen as a secondary port.^[90]

​India’s strategic sensitivities around Chinese military-linked activities in Sri Lanka are long-standing, especially after a Chinese submarine and warship docked in Colombo in November 2014, just weeks after a similar visit by another Chinese submarine, prompting strong protests from New Delhi.^[91] On 5 April 2025, India, Sri Lanka, and the United Arab Emirates (UAE) signed a tripartite agreement to develop Trincomalee into a strategic energy hub. The plan includes a multi-product pipeline and the potential use of the Second World War-era oil tank farm, partially managed by Indian Oil Corporation’s Sri Lankan subsidiary. The agreement, signed during Prime Minister Narendra Modi’s visit to Colombo—the first by a global leader since President Dissanayake took office in 2024—aims to bolster Sri Lanka’s energy infrastructure and economic resilience while reinforcing India’s presence in the Indian Ocean, in response to China's expansive footprint.^[92]

Bangladesh: From ‘Diplomacy of Balance’ to a Pro-China Tilt

Bangladesh is bordered by India for the most part, barring a small boundary with Myanmar in the east. The Bay is therefore Bangladesh’s only conduit for establishing direct overseas trade linkages and connectivity with other countries. Accordingly, the Bay is indispensable to the country’s economy, and the seaports of Chattogram and Mongla currently conduct over 90 percent of its international trade.^[93] Bangladesh, therefore, relies considerably on stability in this maritime space for its economy, security, and the realisation of its foreign policy aspirations. Its Indo-Pacific Outlook (IPO), published under the former Hasina government on 24 April 2023, gave considerable importance to the Bay and had the United Nations Convention on the Law of the Sea (UNCLOS)-1982 as one of its guiding principles. It considered the Bay as its third neighbour and maintained maritime security to be an integral part of Bangladesh’s foreign policy framework to safeguard its commercial interests and natural wealth.

The document committed to upholding “the exercise of freedom of navigation & over-flight” as per international law and conventions.^[94] In doing so and sustainably managing ocean and marine resources, it sought collaboration with other Indo-Pacific partner countries, emphasising maritime partnerships to address emergencies at sea and conduct search and rescue operations. The Bay was thus a key facet of Dhaka’s foreign engagements, bearing the hallmark of maintaining a ‘diplomacy of balance’ in its engagement between powers.^[95]

However, following the regime change in Bangladesh last August, this Outlook is no longer publicly available. The former Awami League administration’s ‘diplomacy of balance’ no longer prevails under the current administration of Muhammad Yunus, which is not only pro-China but also has a strained relationship with India. Whether this interim government will inflict any consequent changes in the IPO is yet to be seen, but it has certainly complicated India’s ties with its eastern neighbourhood and the Bay of Bengal.^[96]

Chattogram Port: As the principal seaport of Bangladesh, the Chattogram port (previously called Chittagong port) has immense growth potential for both India and China. It is ideally located to provide a convenient maritime access to the landlocked states of India’s Northeast. However, it earned its name from the word Chit-le-gan in 1405, meaning a port frequented by Chinese trading vessels.^[97] For China, the port is a gateway into the Indian Ocean. While some international reports have described Chinese investments in the port as part of its plan to “control the maritime energy channels in the Indian Ocean Region and expand the scope of its power through developing ports in South Asian countries,” others have speculated on the possibility of the Chattogram Port being inculcated in China’s ‘string of pearls’ strategy.^[98] However, China has denied both claims, stating that its interest in the port’s development is for joint economic development.^[99]

Bangladesh has nurtured Chinese investments in this port to increase its capacity and traffic. Reports from 2010 recall hopes of securing Chinese assistance of US$8.7 billion to develop the port into a regional commercial hub.^[100] Since then, China’s relations with Bangladesh have only grown stronger, with the former becoming its largest trading partner in 2015, surpassing India. Currently, China enjoys access to the Chattogram port, is interested in constructing and operating the Dhaka-Chittagong High-Speed Rail Project, a 220-kilometre pipeline, and a single mooring point for direct offloading of imported oil at the Chittagong refinery.^[101] It is also building the Chinese Economic and Industrial Zone in Chattogram.^[102] Notably, China built Bangladesh’s first submarine base, the BNS Sheikh Hasina, about 84 km from Chattogram port. Two Chinese-origin Ming-class submarines bought by Bangladesh are also berthed at BNS Issa Khan in Chattogram.^[103] While these facilities lie outside the port, their proximity to key commercial infrastructure raises questions about China’s intentions in the Bay and the signalling around its port engagements.

Dhaka was thus keen on India’s involvement in the Chattogram port to maximise development and maintain diplomatic balance.  Former PM Hasina offered the use of the port to India in April 2022, to provide India’s landlocked Northeast, particularly Assam and Tripura, with a conducive access to the Bay.^[104] Cooperation with India, however, is currently on hold due to the strain in ties with Dhaka’s interim government. Although possibilities of expanding cooperation have been halted, New Delhi continues to use the port to trade goods between its Northeastern states and the rest of the country. The port also relies on Indian territory for its transit cargo from landlocked Nepal and Bhutan.

Mongla Port: ​In March 2023, China committed US$400 million in concessional loans to modernise Bangladesh's Mongla Port—a notable step in bilateral cooperation. This initiative, part of a broader agreement from President Xi Jinping's 2016 visit to Dhaka, aims to enhance the port's infrastructure and operational capacity. The Mongla Port Authority engaged the China Civil Engineering Construction Company for the project, with Egis India Consulting Engineers appointed as consultants. Strategically located in southwestern Bangladesh, the Mongla Port offers China a foothold in the Bay, facilitating access to vital sea lanes and supporting the relocation of Chinese garment manufacturers seeking cost-effective production bases.^[105]

In June 2024, India expressed interest in operating Mongla Port and constructing a new terminal—a move that aligns with India's broader strategy of enhancing its presence in the IOR and complementing its operations in Iran's Chabahar Port and Myanmar's Sittwe Port. The Mongla Port's proximity to India's Northeastern states and the Kolkata Port presents opportunities for improved connectivity and trade, offering an alternative route that bypasses the congested Siliguri Corridor. The potential collaboration was anticipated to be a key topic during Prime Minister Modi's discussions with Sheikh Hasina during her planned visit to India.^[106] ​Subsequently, India reportedly secured the operating rights to a terminal at the Mongla port.^[107]

However, the tables turned during Bangladeshi Chief Adviser Muhammad Yunus's visit to Beijing in March 2025, with China pledging US$400 million for the modernisation of the Mongla Port and US$350 million for developing a China Industrial Economic Zone. These investments aim to bolster Bangladesh's infrastructure, export capabilities, and attract Chinese manufacturing firms.^[108] India’s operation remains stalled but not terminated.

Payra Port: The Payra Port, originally planned to be developed by China, was turned into a joint project of several countries, with larger involvement from India by the former Awami League administration in Bangladesh.^[109] New Delhi and Dhaka had been in talks regarding the construction of facilities at the port owing to its benefits for India’s Northeastern states. China was also keen on the project as the CHEC was set to develop the core port infrastructure, and the China State Construction Engineering Corporation would engage in building housing, healthcare, and education facilities in the port area.^[110] While the port’s construction is still underway, cooperation with India is on hold.

Sonadia Port: The idea of a deep-sea port at Sonadia was first conceived in 2006 to overcome the problem of shallow draft at Chittagong and Mongla ports. China had agreed to construct the port and finance the project. In 2014, when former PM Hasina visited China, the two sides agreed to sign a framework agreement on the deep-sea port, which would entail an investment of US$14 billion. However, that did not materialise as Bangladesh backtracked following intense political pressure from India and the US, which were concerned by China’s growing influence in the IOR. The Sonadia port, with a natural depth of 15 metres, could have been made into a transhipment hub for Bhutan, Nepal, and India’s Northeast, proving to be a valuable asset for Bangladesh.^[111] Experts thus advised Bangladesh not to abandon building a deep-sea port here,^[112] but diplomatic ties with India overruled the suggestion. Dhaka later approached Japan to develop a deep-sea port 25 km away from Sonadia, at Matarbari, which is now under construction.^[113]

Myanmar: Caught in Civil Strife, Caught Between Choices

After its liberalisation in 2011, Myanmar began engaging with extra-regional powers and other Bay littorals through naval exchanges, exploring energy resources, and developing connectivity infrastructure to redefine its geopolitical identity.^[114] However, the 2021 military coup reversed many of these reforms, policy changes, and opaque decision-making, creating uncertainty. Coupled with the Rohingya issue, this has taken a toll on Myanmar’s economic prospects and the dynamic role it could play in developing the Bay of Bengal. Preoccupied with internal strife between the military junta government and the rebel forces, Myanmar’s foreign policy currently lacks direction. However, Myanmar, as a member of the Association of Southeast Asian Nations (ASEAN), continues to adhere to the “ASEAN Outlook of the Indo-Pacific” published in 2019, from which its position on the Bay can be gleaned.

According to this outlook, ASEAN views the Asia-Pacific and Indian Ocean regions, “not as contiguous territorial spaces but as a closely integrated and interconnected region,” with the Association itself playing a central strategic role.^[115] It looks to promote an enabling environment for peace, stability, and prosperity in the region by addressing common challenges, upholding the rules-based regional architecture, and promoting closer economic cooperation. However, it is aware that the rise of material powers, both economic and military, requires avoiding the deepening of mistrust, miscalculation, and patterns of behaviour based on a zero-sum game.^[116] Thus, it emphasises dialogue and cooperation instead of rivalry, recognising the potential for cooperation with other regional mechanisms in the Asia-Pacific and Indian Ocean Region, based on common interests, such as the importance of maritime security and connectivity in the evolving regional architecture.^[117]

While this official foreign policy stance aligns well with the priorities of India’s Act East and Neighbourhood First policies, the reality is different. In civil war-stricken Myanmar, Beijing has considerably more influence than New Delhi. While the latter continues to adhere to its policy of engaging only with the government of a neighbouring state, China is employing a carrot-and-stick approach in Myanmar. It is simultaneously pressuring the ethnic armed groups and supporting the junta's State Administrative Council through diplomatic and military backing, including endorsing its election plans. In doing so, Beijing is employing its ‘Five Cuts’ policy (i.e., cutting off electricity, water, internet, supply chains, and personnel) to ensure compliance. These measures showcase China's intent to influence the rebels and shape Myanmar's political landscape to safeguard its strategic interests.^[118] This unfavourable balance in Myanmar’s current bilateral ties with China and India is reflected in their port development initiatives.

Kyaukphyu Port: After it failed to obtain clearance for Sonadia, China embarked on a new cooperation arrangement with Myanmar to build a deep-sea port and a special economic zone in nearby Kyaukphyu.^[e],[119] This port, worth US$7.3 billion, once completed and connected with Kunming via a rail and road link, will allow China to access the Indian Ocean for direct trade links with West Asia, Europe, and the Atlantic region. The work on the Kyaukphyu Port and its Special Economic Zone (SEZ) began in 2010, but was stalled due to the COVID-19 pandemic and the military coup. The upcoming port is off the coast of the restive Rakhine province, where the ‘Tatmadaw’ (army) is battling the Arakan Army, a frontrunner of the rebel ethnic armed organisations. Rakhine is also the homeland of the Rohingyas, a persecuted Muslim community in Myanmar.^[120]

However, in March 2025, executives from the Chinese state-owned firm CITIC met with the Myanmar junta officials to press for the speedy implementation of the planned Kyaukphyu SEZ and deep-sea port under Beijing’s BRI. The junta media reported that both parties “agreed that the development plan for the deep-sea port should be updated to meet the needs of the current situation.”^[121] Upon completion, the project will serve as the southern endpoint of the 1,700-km China-Myanmar Economic Corridor (CMEC), linking it to the Chinese city of Kunming. This corridor will grant the landlocked Yunnan Province direct access to the Indian Ocean. Moreover, it is a strategic alternative route for Chinese shipping, offering a detour from the congested Strait of Malacca. This diversion will facilitate smoother trade routes with the Middle East, Africa, and Europe.^[122] For India, it is a reason for caution, as the port is also located close to its politically sensitive Northeast region.

Sittwe Port: Seeking a foothold in Myanmar, India acquired control of the Sittwe Port in April 2024 through the IPGL. The agreement includes an extended lease of the port to India, which is to be renewed every three years. The IPGL will raise funds to develop the port further and intends to promote transactions in Indian rupees among traders. Located in the Rakhine Province near the mouth of the Kaladan River, the port is an integral part of the Kaladan Multimodal Transit Transport Project (KMTTP). It is designed to handle deep-sea vessels up to 20,000 Dead Weight Tonnage, and is poised to meet future demand for heavier vessels as usage grows. If linked to Tripura and Mizoram in India, the port can provide a vital ocean link to the landlocked Northeast and better connectivity with the rest of India.^[123] The journey from Kolkata to Agartala takes approximately four days by road, but it will reportedly take less time via the Sittwe–Chittagong–Sabroom–Agartala route, saving money, time and reducing carbon emissions.^[124]

Completing the road section of the project, a highway from Paletwa in Myanmar's Chin state to Zorinpui in Mizoram, will also create a more convenient pathway to move cargo from the Northeast to the Port of Kolkata in West Bengal, India, bypassing the narrow and congested Siliguri Corridor.^[125] However, the construction of remaining highways faces challenges, including a lack of coordination among border agencies and massive security concerns due to insurgency and ongoing civil war, making it difficult to forecast a completion date. While securing the Sittwe port is a diplomatic win for India, its effectiveness as a cost-efficient regular transportation route to the Northeast remains to be determined. Barring Sittwe, the Arakan Army has gained control over most of the Rakhine state. It has signalled major foreign stakeholders like India and China to engage with the on-ground players rather than the junta. However, unlike Beijing, New Delhi faces the dilemma of negotiating with rebel groups, contrary to its stance of dealing only with the government.^[126]

Although port development is only a facet of the Sino-Indian rivalry brewing in this region, it is the most important maritime expression of this competition. From the above analyses, it can be argued that China, given its enhanced influence in the Bay littorals, more economic clout, and proactive outreach, has more ports in the region than India. While India has the natural advantage of the longest coastline in this sea with several of its own ports in the region, its presence in the littorals lags behind China’s, complicating the current political scenario. As an integrated initiative, the Bharat Global Port launched this year is yet to pick up pace with the BRI. China is thus becoming a virtual resident power in the Bay of Bengal and posing a challenge to India in its own neighbourhood.

Implications of Competition in Port Development for India and the Way Forward

The fate of China’s and India’s port projects in the Bay littorals is largely conditioned by the overarching character of their bilateral ties with these countries. For example, despite a history of pro-China tilt, Sri Lanka is trying to attain a diplomatic balance between the two Asian giants under its new government, taking a lesson from its experience with the Hambantota port. Bangladesh, previously counted as India’s closest ally in South Asia, has now strained its ties with New Delhi. Sidelining its traditional “diplomacy of balance”, Dhaka appears to be entertaining a pro-China tilt. Myanmar remains riddled with political strife. However, Beijing has an edge over New Delhi in Naypyidaw, due to its non-discriminatory approach in negotiations.

Under such circumstances, China’s foothold in the Bay has made it a virtual resident power in India’s neighbourhood, via its multiple port projects. China has the edge, due to streamlined planning, extensive investments, and consistent efforts under the rubric of the BRI. Its single-minded pursuit of resources, non-discriminatory approach towards the kinds of government it engages with, and a highly functional public-private interface in providing development assistance have enhanced its reach well beyond its borders to the coastline of the Bay of Bengal. Although India’s geography allows it to secure its interests in the Bay through its own ports along the east coast and in the Andaman and Nicobar Islands, its significance as a development partner in other Bay littorals, concerning port development, remains secondary to China.

New Delhi can undertake certain measures to hold more sway in the Bay of Bengal neighbourhood. These are as discussed in the following points:

1. Unlike China’s, Indian assistance is generally not perceived as a ‘debt trap’, making it a strong alternative. India must capitalise on this goodwill to propagate its investment offers.

2. India has the innate leverage of sharing regional interests and concerns with other Bay littorals. New Delhi can capitalise on these issues to foster cooperation with the Bay littorals as a confidence-building mechanism and enhance its presence and influence in this maritime space.

3. While the Bharat Ports Global consortium is already expanding India’s scope to assist port development in the Bay littorals, it would help to showcase the successes of India’s domestic Sagarmala Programme on port development. Aligning it with the Vision of MAHASAGAR can help make India’s port development initiatives more strategy-oriented. The Bay of Bengal Multi-Sectoral Technical Cooperation (BIMSTEC) can be a suitable platform for India to inspire regional initiatives in port development. The country already hosts BIMSTEC’s Port Conclaves, designed to strengthen port-led connectivity initiatives by sharing best practices and technical knowledge.^[127]

While such initiatives can tailor India’s port development aspirations to become more suitable for the Bay littoral countries, they would need to be backed by strong policy initiatives. New Delhi will also need to be cautious of its institutional and financial limitations, which can affect the implementation of its projects, and plan accordingly.

It is equally important that India’s assistance aligns with each recipient’s development priorities and absorptive capacity so it is not seen merely as geopolitical positioning but as a genuine partnership. In sum, credible delivery, fiscal realism, and country-led alignment will determine whether India’s outreach endures. As India witnesses strained ties with the Bay littorals, particularly Bangladesh and Myanmar, restoring functional bilateralism will be fundamental to realising these aspirations. At the same time, safe and sustainable development cooperation, such as via port development, can also serve to rebuild diplomatic goodwill among estranged nations. This will help India overcome competition and reinstate its prominence in its neighbourhood.

While China holds an advantage in Bay partnerships—owing to deeper finance, long-range planning, and strong institutional backing India’s integrated overseas port development initiative has distinct strengths. Other than its geographic advantages, India is viewed as a reliable partner—backed by democratic legitimacy, a strong neighbourhood-focused Humanitarian Assistance and Disaster Relief record,^[128] and active participation in white-shipping and maritime domain awareness cooperation^[129] that the region values. The country also shares multiple platforms like the BIMSTEC and the Indian Ocean Rim Association with the Bay littorals, where these countries work collectively to manage common challenges. New Delhi is also more suited for tripartite partnerships with other investing democracies, such as Japan, in the region. These assets allow India a unique edge in its port development ventures in the Bay.

---

Sohini Bose is Associate Fellow, Neighbourhood Studies Initiative, Strategic Studies Programme, ORF.

---

All views expressed in this publication are solely those of the author, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

Endnotes

• International Affairs
• China
• India
• bay of bengal trade routes
• china in bay of Bengal
• india china in bay of Bengal
• india china relationship
• india foreign policy
• indo pacific geopolitics
• indo pacific region
• maritime belt and road initiative
• maritime silk road
• sino india relations

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.