Bangladesh has dropped the Indian line of credit (LoC) financing for three major infrastructure projects after months of what officials described as noncooperation from the lender and contractors following the July 2024 political upheaval.

The affected schemes include two railway lines and the development of Mongla seaport. Dhaka is now searching for alternative financiers to revive the delayed projects, senior officials confirmed.

The projects had faced long approval processes, slow disbursements from India’s Exim Bank, and reluctance by contractors to move forward. Costs have escalated as delays mounted.

Bangladesh Railways has been unable to advance two LoC-backed ventures: the Khulna-Darshana double rail line, approved in 2018 at Tk 35.07 billion, and the Bogura–Shaheed M Mansur Ali Station line in Sirajganj, approved the same year at Tk 55.80 billion. Work on both remains stalled despite funding assurances six years ago.

The Bogura-Sirajganj line, considered vital for reducing travel distance to Dhaka by nearly 120 kilometres, was originally due for completion by mid-2023 but has been pushed back to 2026 after repeated delays in studies and design.

Similarly, the Mongla port development project, approved in 2020 at Tk 60.14 billion, has yet to start as financing and contractor support failed to materialise.

Officials also pointed to stringent LoC conditions requiring 75% of goods and services to be sourced from India as a barrier to timely implementation.

India has extended three LoCs to Bangladesh since 2010, worth $7.36 billion for 40 projects, but only 15 have been completed. Disbursements have fallen sharply, with just $184.6 million released in FY2025 compared with $311.4 million the year before.

Dhaka is now considering new lenders to keep the shelved projects alive.