NEW DELHI, March 9: Seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17 per cent in Bangladesh and 8 per cent in India, a new World Bank report said.
The World Bank report titled ‘Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia’, released today analyses the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA), compares it with international best practices and identifies its strengths as well as gaps for seamless regional connectivity. The report also discusses regional policy actions the countries can take to strengthen the MVA and proposes priorities for infrastructure investments that will help the countries maximise its benefits.
Today, bilateral trade accounts for only about 10 per cent of Bangladesh’s trade and a mere 1 per cent of India’s trade. Whereas, in East Asian and Sub-Saharan African economies, intraregional trade accounts for 50 per cent and 22 per cent of total trade, respectively. In fact, it is about 15-20 per cent less expensive for a company in India to trade with a company in Brazil or Germany than with a company in Bangladesh, the report points out. High tariffs, para-tariffs, and non-tariff barriers also serve as major trade barriers. Simple average tariffs in Bangladesh and India are more than twice the world average.
Previous analysis indicates that Bangladesh’s exports to India could increase by 182 per cent and India’s exports to Bangladesh by 126 per cent if the countries sign a free trade agreement. This analysis found that improving transport connectivity between the two countries could increase exports even further, yielding a 297 per cent increase in Bangladesh’s exports to India and a 172 per cent increase in India’s exports to Bangladesh.
Weak transport integration makes the border between Bangladesh and India thick. Crossing the India-Bangladesh border at Petrapole-Benapole, the most important border post between the two countries, takes several days. In contrast, the time to cross borders handling similar volumes of traffic in other regions of the world, including East Africa, is less than six hours, the report highlights.
At present, Indian trucks are not allowed to transit through Bangladesh. As a result, the North-east of India is particularly isolated with the rest of the country and is connected only through the 27-km-wide Siliguri corridor, also called the ‘Chicken’s Neck’. This leads to long and costly routes. Goods from Agartala, for example, travel 1,600 km through the Siliguri corridor to reach Kolkata Port instead of 450 km through Bangladesh. If the border were open to Indian trucks, goods from Agartala would have to travel just 200 km to the Chattogram Port in Bangladesh, and the transport costs to the port would be 80 per cent lower, the report estimates.
According to the report, all districts in Bangladesh would benefit from integration, with the eastern districts enjoying larger gains in real income. States bordering Bangladesh such as Assam, Meghalaya, Mizoram, and Tripura in the North-east, and West Bengal on the west, and States further away from Bangladesh such as Uttar Pradesh and Maharashtra would also gain huge economic benefits from seamless connectivity.
However, unleashing the full potential of integration in the region requires strengthening the agreement signed in 2015. Countries need to address a number of challenges such as infrastructure deficits, particularly in designated border posts, harmonisation of regulations and customs procedures, the report says.