Amid growing geoeconomic uncertainty and intensifying U.S.–China competition, the Bay of Bengal region has emerged as a new focal point for global production networks. Seeking alternative manufacturing bases beyond China, multinational firms are increasingly investing in coastal areas of India, Bangladesh, and Malaysia, regions that are rapidly integrating into Asia’s evolving “flying geese industrialization” pattern.

India’s coastal states exhibit distinct industrial profiles: Andhra Pradesh specializes in food processing, Tamil Nadu serves as a hub for automotive and electronics manufacturing, and Odisha and West Bengal host resource-based industries supported by abundant mineral and energy reserves. Bangladesh’s coastal zones are anchored in textiles and ship recycling while expanding into pharmaceuticals. Malaysia’s western region remains a critical node in the global semiconductor value chain.

Central and state governments across the region are implementing proactive industrial policies characterized by clear target sectors, investment incentives, institutional coordination, and detailed implementation roadmaps. Their two-track approach promotes both comparative advantage–conforming industries that build on existing strengths and comparative advantage–defying sectors that aim to move up the global value chain. Industrial park development is at the core of this strategy, offering concentrated, infrastructure-ready production bases designed to maximize agglomeration effects and attract investment.

The study identifies over 1,400 industrial clusters across the Bay of Bengal, with expansion occurring through two major patterns: (1) hub-and-spoke growth around established clusters and (2) corridor-based development integrating multimodal logistics infrastructure. While most parks are government-led, an increasing number involve private developers, often supported through public–private partnerships. Cluster ecosystems typically involve a network of industrial associations, resident firms, research institutions, and local organizations.

Although the region’s geopolitical landscape remains relatively calm, the Bay of Bengal nevertheless faces its own regional risks. Military and infrastructure competition among global and regional powers, illegal marine activities, and undersea cables are among the risk factors that could destabilize the Bay of Bengal’s value chain and production bases.

The report concludes with three key policy implications for the Korean government. First, provide Korea’s small and medium enterprises with detailed and practical information on the region’s industrial parks while offering financial and administrative support to those relocating production bases to the region in pursuit of greater economic security. Second, step up the monitoring of regional risks as the Bay of Bengal becomes an increasingly integral part of Korean companies’ global value chains. In addition to the geopolitical and infrastructural risks highlighted in the report, potential risks related to climate change could also have significant implications for regional supply chains, warranting the establishment of appropriate contingency plans in advance. Finally, mobilize Korea’s development financing to support the creation and management of industrial parks in the region. Korea’s development finance policy increasingly emphasizes scale, visibility, strategic value, and development impact, criteria that industrial park projects meet effectively. Supporting such projects directly or indirectly would not only strengthen local development outcomes but also provide enabling environments for Korean companies seeking to expand their presence in the Bay of Bengal.