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In quest of trade and connectivity

PUNJAB NEWS EXPRESS | November 17, 2022 11:03 AM

The transit issue between India and Bangladesh has long been debated. An agreement was made in 2010 to carry products to India's northeastern states through the Bangladesh route. Since then, several arguments and complaints have centered on the transit problem, which climax in 2016 when Bangladesh agreed to allow India to use its road in exchange for a nominal tariff.

During Hon'ble Prime Minister Sheikh Hasina's visit to India in 2018, an agreement was made to carry products by road to India's north-eastern states via the ports of Mongla and Chittagong. Since then, products have been transported to Assam and Meghalaya in India on a trial basis utilizing Bangladesh's transit infrastructure.

Despite extensive negotiations, however, discussions of utilizing India as a corridor for shipping products to Nepal and Bhutan were not making much progress. Finally, in a joint statement issued following Sheikh Hasina's meeting with Narendra Modi on the second day of her visit to India in September this year, India provided duty-free transit via its territory for exporting products to Nepal and Bhutan via selected land customs stations, airports, and seaports.

Bangladesh would be able to trade more easily with Nepal and Bhutan if transit through India is enabled. Aside from land, Bangladesh may transport products via Indian airports.

Benefits for Nepal and Bhutan:
Nepal and Bhutan may gain the most from this service. India accounts for 90% of its international commerce. The remaining 10% of international commerce is exclusively channeled via Kolkata port, where India generates income.

If the facility is built, Nepal and Bhutan will have additional foreign trade partners as well as another port option in Mongla. They can save up to 30% on imports by using the Mongla port. This will provide an opportunity for both countries to reduce their reliance on India.

Benefits for Bangladesh:
According to authorities, economists, and businesspeople, India's offer of free transit will broaden the regional and sub-regional market for Bangladesh's exporters by allowing them to send goods to nations such as Nepal and Bhutan.
Bangladesh has a potential market base in Nepal and Bhutan for textiles, medicines, feed, vegetables, electrical items, and so on. If the facility is adequately deployed, markets in Nepal and Bhutan can be investigated.
Mongla port may be used for commerce with Nepal and Bhutan. This would not only create cash, but it will also alleviate the tremendous burden on Chittagong port.

India's priorities:
Transit has been a source of contention between Bangladesh and India for a long time. For many years, Bangladesh has constantly requested transit via India to Nepal and Bhutan, to which India has lately reacted positively; nevertheless, India has been enjoying transit privileges from Bangladesh for a few years now.

In Nepal and Bhutan, India holds a monopoly on the market. Giving Bangladesh unrestricted access to those nations will cost India a lot of money. Not only would they lose exports, but they may also lose the cash they earned from the Kolkata port by directing Nepal and Bhutan's imports.

Though the central government of India was much humbler in embracing Bangladesh's request to give transit to Nepal and Bhutan, the West Bengal government remained adamant because they do not want to lose revenue from the Kolkata port. Given the West Bengal government's likely opposition, bringing the transit concept into reality will be difficult.

In this case, the question naturally arises, why India agreed to provide transit facilities?
The Indian offer, on the other hand, is nothing new, as it is specified in the papers of the Motor Vehicle Agreements between Bangladesh, Bhutan, India, and Nepal.

The agreement has yet to be concluded since the Bhutanese parliament has raised objections, and Nepal has also shown disinterest in signing the agreement. It's easy to understand Bhutan and Nepal's reluctance to join BBIN. The tourist sector generates the majority of Nepal's and Bhutan's revenue. Accepting a BBIN motor vehicle deal might jeopardize their national revenue. If two BBIN members agree on free vehicle movement, additional members will be urged to activate the agreement for increased regional commerce.

Bangladesh already enables commodities to be transported from India's heartland to its northeastern regions. India's proposal for a transit facility to Bangladesh is in response to Bangladesh's offer and to persuade Nepal and Bhutan to join BBIN.

Bangladesh's bargaining weakness on the transit question has made the transit proposal so long. When it comes to executing the transportation idea, Bangladesh must hone its negotiation leverage. Furthermore, the exchange receipt, which port to utilize, other expenditure sectors, and how much Bangladesh would profit from it should all be carefully considered.

It may appear that Nepal, Bhutan, and Bangladesh will profit the most from the transit facility, as opposed to India. For India, it is a minor price to pay to convince other parties to join the BBIN free vehicle movement pact. If the BBIN motor vehicle agreement is implemented, India will profit the most in terms of commerce and connectivity. India can only conquer if others enjoy victory as well. If correctly executed, this tax-free transit concept can be a win-win for all stakeholders.

{Author Profile: Anup Sinha is a researcher and freelance columnist specializing in South Asian Affairs with a particular focus on the Rohingya issue, India-Bangladesh relations, water sharing, etc. He has an MSS degree in International Relations from the University of Dhaka.}

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