We present annual estimates of the net ecosystem exchange (NEE) of carbon dioxide (CO2) accumulated over one annual cycle (April 2012 to March 2013) in the world’s largest mangrove ecosystem, Sundarbans (India), using the eddy covariance method. An eddy covariance flux tower was established in April 2012 to study the seasonal variations of carbon dioxide fluxes due to soil and vegetation-atmosphere interactions. The half-hourly maximum of the net ecosystem exchange (NEE) varied from −6 µmol·m−2·s−1 during the summer (April to June 2012) to −10 µmol·m−2·s−1 during the winter (October to December 2012), whereas the half-hourly maximum of H2O flux varied from 5.5 to 2.5 mmol·m−2·s−1 during October 2013 and July 2013, respectively. During the study period, the study area was a carbon dioxide sink with an annual net ecosystem productivity (NEP = −NEE) of 249 ± 20 g·C m−2·year−1. The mean annual evapotranspiration (ET) was estimated to be 1.96 ± 0.33 mm·day−1. The gap-filled NEE was also partitioned into Gross Primary Productivity (GPP) and Ecosystem Respiration (Re). The total GPP and Re over the study area for the annual cycle were estimated to be1271 g C m−2·year−1 and 1022 g C m−2·year−1, respectively. The closure of the surface energy balance accounted for of about 78% of the available energy during the study period. Our findings suggest that the Sundarbans mangroves are currently a substantial carbon sink, indicating that the protection and management of these forests would lead as a strategy towards reduction in carbon dioxide emissions.