In a major boost to India-Bangladesh bilateral relations, the Bangladesh Cabinet has approved the draft of the proposed Agreement with India to allow it to use the Chittagong and Mongla ports for transporting goods to and from India. This agreement shall especially facilitate the two-way movement of goods from the landlocked North Eastern parts of India through both the ports on one hand and provide a major boost to South Asian sub-regional cooperation on the other.
The agreement would mark the culmination of a proposal which was initiated during the summit meeting in 2010 and got a major push during the Dhaka visit of the Indian Prime Minister Narendra Modi in 2015. The shipping and maritime sectors were a major thrust area when both Prime Ministers Narendra Modi and Sheikh Hasina met and six specific maritime agreements were inked. These included the Agreements on Coastal Shipping and the deal on use of Chittagong and Mongla ports by India. India has also extended lines of credit for development of transport and port infrastructure in Bangladesh during Mr. Modi’s visit to Dhaka.
The agreement, by allowing the movement of goods to and from North-eastern parts of India would drastically cut down upon the logistics costs and time. The goods shall move through specific land borders like Agartala-Akhaura and Dwaki-Tamabil. A major development, in line with international best practices, is the movement of these goods on the strength of a bond equivalent of duties and taxes from the Indian companies. The various charges, fees and carrying cost will be recovered in accordance with the General Agreement on Trade and Tariffs (GATT) principles. The tamper proof movement of cargo shall be facilitated by state of the art ‘track and trace’ technologies using global positioning systems, e-locks and e-seals. India also facilitates transit movement of Bangladeshi and Nepalese goods without levying any taxes, duties or fees through its territory.
In terms of the agreement, movement of goods shall be in Bangladeshi vehicles only. There is a general expectation that with the fructification of the Bangladesh-Bhutan-India-Nepal (BBIN) transit and transport agreement, Indian vehicles shall also be allowed to move cargo seamlessly from its hinterland to the Chittagong and Mongla ports without involving complex transhipment procedures. The Agreement also allows for use of these ports by Nepal thus setting an outstanding example of sub-regional cooperation apart from promoting integration in terms of trade, supply chain and regional value chains. Bangladesh, in a gesture to promote bilateral ties with Nepal, has offered massive discounts
on movement of Nepalese cargo through the Mongla port. This shall also facilitate greater use of the Mongla port, currently running at less than optimal capacity. The agreement is valid for five years with an auto renewal clause of another five years with either of the parties having an option to terminate the agreement by giving a six months’ advance notice.
The agreement shall add another feather in the cap of Indo-Bangladesh bilateral relations. Immediately after the decision of the Bangladesh Cabinet, both the Prime Ministers of India and Bangladesh jointly inaugurated the construction of the 130 kilometre Friendship pipeline project to connect Siliguri in India with Parbatipur in Bangladesh and the Dhaka-Tongi-Joydebpur railway project. These connectivity initiatives shall further foster interdependence amongst the neighbours whose relationship in the words of Prime Minister Modi “stands as an example to the world”. In the recent past, bilateral relations have been on a new high with the inking of the historic land boundary agreement which put an end to the border dispute of more than forty years. India’s ‘Act East’ policy shall get a boost, if in future; both countries can negotiate use of these ports for exports from and imports into India.
Script: Satyajit Mohanty, Irs, Economic Commentator