Dhaka, May 23 -- Bangladesh has reportedly cancelled a $21 million contract with Kolkata-based defence shipyard Garden Reach Shipbuilding & Engineers (GRSE) for the construction of an advanced ocean-going tug amid fraught ties with India.

The agreement, signed last year, involved the design, construction, and delivery of a 61-metre, 800-tonne tug within 24 months, Times of India reports.

It was the first major project under the $500 million defence line of credit extended by India to Bangladesh, which became operational in 2023.

The deal, involving a tug capable of reaching speeds of at least 13 knots while fully loaded, was signed in Dhaka in July 2023 by officials from Bangladesh's Directorate General Defence Purchase and GRSE, accor...