Finance minister Pranab Mukherjee today underlined the need for India and Bangladesh to deepen counter-terrorism cooperation, warning that insurgents have the "potential" to affect the bilateral ties.
Mukherjee, who arrived in Dhaka today on a four-hour long visit, said India "deeply appreciates" the efforts of Bangladesh to tackle terrorism as the menace was a common concern of the two neighbours.
"We deeply appreciate the efforts of the government of Bangladesh to tackle this menace and we will continue to be closely engaged” for enhanced bilateral security cooperation, he told a press briefing at the state guest house Jamuna after the inking a $1 billion loan deal for Bangladesh, the largest line of credit received by Dhaka under a single agreement.
Mukherjee identified "security cooperation" to be an area that engaged the attention of both the countries "given our common desire to root out the forces of extremism and terrorism from our midst".
"Insurgents and insurgent groups have the potential to affect our relations," warned Mukherjee, who is the first high-profile Indian leader to visit Bangladesh after prime minister Sheikh Hasina's landmark trip to New Delhi in January.
Bangladesh and India had signed three agreements to combat terrorism and cross border crimes alongside mutual legal assistance and transfer of sentenced persons and an MoU on power cooperation during Hasina's maiden India tour.
Hasina had promised not to allow Indian separatist groups to use Bangladeshi soil. Arbinda Rajkhowa, the chief of banned separatist group United Liberation Front of Asom (ULFA), along with its deputy military chief were handed over to Indian authorities by Bangladesh in December last year.
Hasina, who survived a grenade attack on August 21, 2004 when HuJI activists hurled 13 grenades at her rally, has underlined her government's determination to root out terrorism from the country.
Hasina, who assumed office as prime minister in January after a landslide election win on December 29, 2008, has looked beyond her borders to tackle the terror menace by floating the idea of a regional mechanism involving all states in South Asia.
In the largest-ever loan India has given to any foreign country, New Delhi today signed an agreement with Bangladesh to extend a $1 billion credit line to Dhaka for developing 14 infrastructure projects, mostly in the communications sector.
The loan agreement was signed between the Exim Bank of India and the economic relations department of Bangladesh in the presence of Mukherjee. Relations between the South Asian neighbours were chilly between 2001-2006 when the Islamist-allied BNP was in power in Bangladesh and New Delhi regularly accused Dhaka of harbouring anti-India insurgents and fostering militancy.
The bilateral ties, however, have been on the upswing since Hasina came to power after the landmark general election in 2008.
"This $1 billion line of credit is the largest ever given by India to any country," Mukherjee said.
"I am confident that this line of credit will be the stepping stone for a shared destiny and will transform our bilateral engagement," he said at the function to ink the loan deal.
The deal comes soon after a 35-year bilateral pact for power transmission under which India will export up to 500mw of electricity to Bangladesh, starting from late 2012.
Bangladeshi finance minister AMA Muhith said the massive loan would boost economic ties between the two neighbours and would go a long way to upgrade the country's poor transport infrastructure which he described as being "in extremely bad shape".
The senior minister arrived in the capital today for a lightning visit to attend the load signing and for talks with government leaders. He is scheduled to leave for India late Saturday.
Bangladesh has witnessed a massive anti-terrorism clampdown over the last few years that has led to the arrests of over a dozen suspected Pakistani and Indian Islamist militants belonging to outfits like Laskar-e-Taiba.
Pakistan-based militant groups like LeT, Harkat-ul Mujahideen, JeM and HuJI are among 15 foreign terror groups who were active or are still operating in Bangladesh since 1991 using the country as a safe shelter or transit to infiltrate India.
Operatives of several groups used to visit Bangladesh from Pakistan and then India to commit their activities, while many from India also sneaked into Bangladesh and then visited Pakistan with fake Bangladeshi passports to have training on arms and explosives, according to an earlier media report.
Bangladesh's anti-Terrorism Ordinance had recently empowered the bank to freeze accounts of suspected terrorists and their monetary transactions.
A leading Bangladeshi security think tank has suggested enhanced Dhaka-New Delhi cooperation to address bilateral security concerns saying effective management of a security regime was crucial for good relations between the two countries.
"Effectively managing a security regime which is important not only for countering terrorism but also for maintaining and underpinning a secure atmosphere in relations between the two countries," Bangladesh Institute for Peace and Security Studies (BIPSS) said in a special report published recently.
"The authorities must give due attention to the issue... our observation suggests that the ultra left groups are likely to emerge with more strength in particular pockets of the southwestern region," said Major General (retd) ANM Muniruzzaman, who heads BIPSS.