Transit and Regional Connectivity Are Essential for the Development of Bangladesh

Hiren Pandit: Prime Minister Sheikh Hasina said, ‘I always protect the country’s interests. Awami League does not sell the country. Because we made this country independent, you must understand the transit, transshipment, and corridor issues before you say that the government is being sold the country. At present, Bangladesh-India trains run on five routes. Three are passenger interchanges, while the remaining two are freight interchanges. India’s cargo rail will enter Bangladesh through the corridor system. This train will come from Gede in India to Chuadanga in Bangladesh. From there, it will go to Haldibari station in Cooch Behar district of West Bengal, India, via Chilahati station bordering Pabna, Abdulpur of Natore, Parbatipur of Dinajpur, Nilphamari.

This agreement will reduce the cost of goods transportation in at least six states of India. India will benefit significantly from using the corridor of Bangladesh to transport goods from one state to another. However, the profit rate for Bangladesh is not at all low; in addition, the profit for Bangladesh is higher in the long run. Rail transit is one of the ten MoUs signed recently during Bangladesh Prime Minister Sheikh Hasina’s visit to India. If this is implemented, India will benefit from directly transporting its goods from one part of the country to another by rail using the territory of Bangladesh. India’s railways may be run through Bangladesh experimentally.

This MoU has generated mixed reactions in Bangladesh’s political arena. The opposition political party BNP and its allies say, “This agreement is like selling the country.” Prime Minister Sheikh Hasina responded to the criticism. She said, “I cannot sit with the door closed. Trains run from one country in Europe to many countries. They enjoy immense opportunities for communication. They do not talk about selling the country. India is Bangladesh’s second major trading partner. Bangladesh is a significant export source and one of Asia’s top ten investing countries.

The Prime Minister has chosen India as her top priority. India has pledged about $8 billion in soft loans for various projects in Bangladesh, of which $2 billion has already been disbursed. Bangladesh has received 80 percent of India’s $10 billion loan under the Line of Credit in South Asia. India has loaned $500 million to support its defense modernization policy. Because India wants to see a robust defense system in Bangladesh. Bangladesh is considered India’s most trusted friend in South Asia. When the price of a daily commodity suddenly increases in Bangladesh, the Bangladesh government immediately accepts India’s cooperation. The people of the country get the result directly. A significant issue is the Bangladesh-India trade deficit.

China is Bangladesh’s leading trading partner after India, but India is still Bangladesh’s second-largest trading partner. Bangladesh’s foreign trade with India is critical for three reasons. Firstly, the raw material of Bangladesh’s main export product mainly comes from India, which Bangladesh exports to Europe by making ready-made garments. India is the primary source of petroleum and foodstuff imports. India is also the source of Bangladesh’s major exports outside the Western countries. India itself is Bangladesh’s main competitor in the garment industry. However, India has not imposed any restrictions due to the diplomatic skills of Bangladesh’s Sheikh Hasina government and strong relations between Bangladesh-India businessmen. The government’s ‘friendly’ policy has most protected Bangladesh’s interests. It is not anti-India; good relations with India can only protect Bangladesh’s interests. Prime Minister Sheikh Hasina is moving forward in that realistic and much-needed way with great wisdom.

With Bangladesh in the middle, transporting goods between the states and other parts of the country is expensive and time-consuming. That is why India has been asking for a goods transit facility from Bangladesh. A few years ago, Bangladesh allowed goods to be transported or transited on two routes. Bangladesh gains or loses by giving transit-transshipment to India? Transit is when a country is used to carry goods for another country; it is considered a transit facility of that country. If India’s transit facility is given to Bangladesh, Bangladesh’s cargo vehicles can go to Nepal or any third country using Indian soil. At least three countries should be involved with it.

Only one country’s land is used here. Again, the cargo vehicles of a country will go to the border port of a neighboring country and deliver the goods to the country’s vehicles. Those vehicles will transport the goods and deliver them to the cars of that country waiting at the border of the other side in exchange for the fixed fare – this is transshipment. Indian cargo ships arrive at Bangladesh’s Chittagong port and unload their cargo. Again, the Bangladeshi trucks carry the goods to the Assam-Tripura border of India and deliver them to the Indian trucks. Transshipment can also be done through land ports, which is economically more profitable. Whoever owns the land, the vehicles must also belong to him.

India has provided transit facilities to Bangladesh, allowing the country to increase exports to Nepal, Bhutan, Pakistan, Iran, and other nations by using Indian land. A memorandum of understanding was signed between the two countries on June 23, 2024, to import 40 MW of electricity from Nepal via Indian territory. This transit-transshipment will enhance regional communication and trade. Construction of the country’s 4th seaport is underway in Maheshkhali, the country’s first seaport. Once operational, India will use the port, boosting Bangladesh’s income significantly. Bangladesh should focus on facilitating Bangladeshi ships to bring goods from India and explore options to expand the port’s capacity to maximize benefits.

Additionally, key priorities should be ensuring fair transit fares for rail transport and reaping benefits in Teesta water distribution while emphasizing bilateral trade, regional stability, and cooperation within various regional organizations. Building on balanced foreign relations, Bangladesh should aim to maintain a mutually beneficial relationship with India and promote win-win situations over one-sided gains. Moreover, an agreement has been made for Indian freight trains to enter various locations in Bangladesh and subsequently travel to India, reducing transportation costs for goods in India. Being mindful of the savings incurred, Bangladesh can negotiate a benefit-sharing arrangement.

A corridor is the opportunity for vehicles of one country to reach another part of that country over another. If any of their cars from India’s West Bengal go through Bangladesh to Assam state, Bangladesh will be the corridor for them. In 2010, a long-term agreement was signed to transport goods to the North-Eastern states of India using Bangladesh’s roadways. Bangladesh started providing multimodal transshipment facilities to India in 2010. It started using the Ashuganj naval port under the maritime protocol between the two countries. First, Indian goods were transported experimentally by sea from Kolkata to Ashuganj, then by road from Ashuganj to Akhaura-Agartala. It was then officially introduced as a regular system in 2016. A nominal tax of Tk 192 per ton was levied in 2016 for road use in Bangladesh.

In the last week of April 2023, Bangladesh fully opened the doors for regular import and export of goods from the Indian mainland to the northeastern states using Bangladesh’s Chittagong and Mongla seaports. By doing this, India can use these two ports commercially.

In the future, if goods imported from third countries are cleared through Chittagong port and taken to Tripura or Meghalaya, then it is a full international transit. Under this facility, goods can be transported from one end of India to another by paying a fixed tariff to Bangladesh. Bangladeshi vehicles must be used during transportation in Bangladesh territory. The minimum tariff for transporting Indian containers in the territory of Bangladesh is fixed at Tk. 589. Nepal and Bhutan signed transit agreements with Bangladesh in 1976 and 1984, respectively. However, it did not work due to various obstacles. The number of land ports and transit routes increased after 2010 to overcome this situation. Trucks from Nepal and Bhutan can use Indian territory to carry goods up to the Bangladesh border. But it cannot travel to Mongla or Chittagong port after entering Bangladesh. In this case, goods were taken to the Indian border in a Bangladeshi truck and released. Then, Indian, Nepalese, or Bhutanese trucks pick it up and go to the specified destination.

This transshipment system has been in operation for a long time. In 2022, India offered Bangladesh free transportation of goods to any third country using its land ports, airports, and sea ports. With this, Bangladeshi cargo trucks can now go to Nepal and Bhutan through specific land ports and routes in India. However, before this, India provided a transit facility for fertilizer export from Bangladesh to Nepal in 2021 by paying customs duty. However, overall transit and accessible transit facilities are not yet available. The market for Bangladeshi products is expanding in Nepal and Bhutan. Bangladesh may benefit if the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicle Agreement is implemented. Bhutan, however, has not yet signed the treaty. On June 23, 2024, the Prime Ministers of Bangladesh and India met to discuss the issue of rail transit.

Until now, Indian trains used to come to the border of Bangladesh and change engines, running on Bangladeshi engines on Bangladeshi territory. But now, Indian railways can use Bangladeshi territory to connect East-West India. Regional connectivity is the central theme of this agreement. The agreement will be signed to introduce rail connectivity between India, Bangladesh, Bhutan, and Nepal. This is India’s advantage; the cost of transporting goods from the western states to the northeastern states will be significantly reduced.

India has also given transit to Bangladesh after providing facilities to India. As a result, an opportunity has been created for Bangladesh to increase the export of goods to Nepal, Bhutan, Pakistan, Iran, etc., by using Indian land. In a meeting between the two countries on June 23, 2024, a memorandum of understanding was signed to import 40 MW of electricity from Nepal using Indian territory. Transit-transshipment will play a role in enhancing regional communication and trade. The 4th seaport of the country is being constructed at Maheshkhali, which will be the first seaport of the country. By providing a transshipment facility, this seaport will be used by India, and Bangladesh’s income will increase significantly. What should Bangladesh do to get more benefits? Attention should be paid to catching the business so Bangladeshi ships can bring goods from India.

Bangladesh and India want to maintain a friendly relationship for bilateral trade, regional stability, and geographical reasons. Bangladesh imports the second highest from India. In particular, India is essential for food products. Both countries need each other for regional security as well. Both countries are recognized as voices of the Global South or developing countries. Many say Bangladesh is becoming more dependent on India, which is not logical. Bangladesh is independent enough to be a friend to all and enmity to none. They are pursuing foreign policy. Bangladesh is successfully implementing a balanced policy. Bangladesh has achieved its interests through balanced relations with the United States, Russia, China, India, Japan, ASEAN, and the Middle East.

However, as neighbors, the depth and dependence of the relationship between the two countries is naturally high, and the matter is inevitable for the two countries’ progress. In this case, instead of a one-sided profit, it is a win-win, or the main thing is to maintain the profit of both parties. At present, Bangladesh-India trains run on five routes. Three are passenger interchanges, while the remaining two are freight interchanges. However, in the current system, the train enters Bangladesh on a Bangladeshi engine after arriving at the border. Then the Bangladeshi driver drove it.

The opportunity to import and export goods through Bangladesh will significantly reduce the cost of transporting goods in India. Therefore, considering the amount of money they save, Bangladesh can use a benefit-sharing formula.

Hiren Pandit is an essayist, researcher and a columnist

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