Indian Prime Minister Narendra Modi on 8 March 2021 virtually inaugurated the India-Bangladesh Friendship Bridge (Maitri Setu) over the Feni River at Sabroom in south Tripura, writing a new chapter in the long-standing Indo-Bangladesh relationship.
The name of the 1.9 kilometre-long bridge (Maitri Setu) itself symbolises the growing bilateral relations and friendly ties between the two countries even as Prime Minister Sheikh Hasina joining her Indian counterpart in the event, said in a video message that the inauguration of the Maitri Setu would herald a new chapter in relations between the neighbours while also informing that the Bangladesh Government had declared the Chittagong and Mongla ports as Ports of Call to facilitate India’s uninterrupted international and domestic trade activities through waterways in Bangladesh.
It may be mentioned here that the India-Bangladesh bonhomie has scaled new heights in recent years under the able and the visionary leaderships of the respective Prime Ministers which has not only opened up new growth opportunities for both the countries but also paved way for further strengthening the regional collaboration, to put up a joint front before the global arena.
Billion dollar export mark reached!
In 2019, Bangladesh’s exports to India, a non-traditional potential export destination, for the first time reached the billion dollar mark, with goods worth US$1.25 billion sold to the neighbouring country.
According to Bangladesh’s Export Promotion Bureau (EPB) data, the country’s exports to India stood at US$1.25 billion, up by 42.91 per cent, which was US$873.27 million in the previous fiscal and, of the total amount, apparel sector earned US$499.09 million in 2018-19 fiscal, which was 79.09 per cent higher compared to US$278.67 million in the previous year while knitwear products accounted for US$369.43 million and woven items US$129.66 million.
“India is a growing market for Bangladesh, where non-tariff barriers were hindering exports to the neighbouring country. In recent times, these barriers are relaxed to some extent,” underlined the World Bank Lead Economist in Bangladesh Zahid Hussain speaking to the media then even as former Commerce Minister Tofail Ahmed on his part stated, “As a friend of Bangladesh, India has also given duty-free market access to all Bangladeshi goods except alcohol and tobacco. This has given opportunities to Bangladeshi exporters to attain a leap in export earnings…During my regime; I increased cash incentives from 3 per cent to 4 per cent to increase performance to non-traditional export destinations.”
The fact that population-wise India is the second largest country after China with better purchasing power where scores of global retail biggies as well as domestic players are operating to cash on the emerging opportunity, also opened scope for Bangladesh to increase exports to India even as the Government’s cash incentives against export of apparel goods to non-traditional export destinations, also played its part in making India a sought-after export destination from Bangladesh’s perspective.
India has become a billion dollar exports market for Bangladesh; it is a good sign, which indicates that regional market is becoming more potential, underscored Centre for Policy Dialogue’s (CPD) Research Director Khondaker Golam Moazzem.
Working together to explore new avenues…
For years, Apparel Online has been advocating (through its editorials, articles, sourcing event-Apparel Sourcing Week, etc.) the point that India and Bangladesh are not competitors, and that they have to grow collectively by supporting each other’s strengths…and it should be a win-win for both the countries. This is the only way the two nations can put up a joint front to give strong competition to China.
Finally, things are apparently moving in that direction, as in a virtual meeting organised by Apparel Online in 2020, Textile Ministers, senior bureaucrats and industry stalwarts from both the sides unanimously agreed that India and Bangladesh should target to have a 35 per cent share of global textile and apparel trade in the next 5 years even as the Indian Government felt it was time to work as one Asia without a sense of competition with Bangladesh.
The big question now -Is it possible that both the countries can achieve this ambitious share in the global textile market of US $ 1 trillion, which is expected to reach US $1.600 trillion by 2025?
India’s overall textile and apparel export was around US $ 39 billion (in FY ’19), and before the Coronavirus pandemic, it was said that it is expected to reach US $ 82 billion in 2021.While on the other hand, Bangladesh apparel export was US$ 27.95 billion in FY ’20 compared to US$34.13 billion in the previous fiscal year. Earlier, its target for 2020-21 was US$ 50 billion; while looking at the fallouts of the pandemic, it was set at US$ 33.78 billion.
So, to put things in perspective, both the countries have textile and apparel exports of around US$ 66.95 billion, and together they have to achieve at least US$ 350 billion, which effectively means that they have to grow collectively at the rate of 5.22 times even as looking at the trends in the last few years, it seems difficult for India’s export to grow rapidly in future, as things have become stagnant. However, as per the Government, this target can be achieved by developing regional value chains, with India supplying raw materials and Bangladesh exporting value-added goods like fabric and apparel clothing to the world.
It may be mentioned here that there are hundreds of brands, retailers, wholesale buyers/importers who are sourcing from both the countries, being nominated suppliers of various products. Similarly, many technology suppliers have the same strong hold in both the countries, so all in all, there is an ecosystem which just needs to strengthen with a positive mindset to achieve a common goal, and together, India and Bangladesh cover most of the product categories including basic to high value-added and even technical textiles.
Addressing the connectivity issues to make a win-win situation for all!
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, says a new World Bank report, which was presented at a virtual press conference recently.
The study, Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia, analysed the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA), compared it with international best practices and identified its strengths as well as gaps for seamless regional connectivity. The report also discussed regional policy actions the countries can take to strengthen the MVA and proposed priorities for infrastructure investments that will help the countries maximise their benefits.
“Thick border slows down transport and economies and easing border restriction generates significant benefits for the neighbouring countries. Ultimately, connectivity offers the promise of long term sustainability and inclusive growth. The World Bank funded US$ 2.1 billion for developing connectivity infrastructures for BBIN countries,” said Junaid Ahmad, World Bank Country Director for India even as he went ahead to quote Prime Minister Sheikh Hasina and underlined that political boundaries shouldn’t become physical barriers to trade.
As per the World Bank, the 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 even as it added that high tariffs, para-tariffs and nontariff barriers also serve as major trade barriers and the simple average tariffs in Bangladesh and India are more than twice the world average.
“Geographically, Bangladesh’s location makes it a strategic gateway to India, Nepal, Bhutan and other East Asian countries. Bangladesh can also become an economic powerhouse by improving regional trade, transit and logistics networks,” said Mercy Tembon, World Bank Country Director for Bangladesh and Bhutan, adding, “While trade between India and Bangladesh has increased substantially over the last decade, it is estimated to be US$ 10 billion below its current potential,” she added.
The weak transport integration makes the border between Bangladesh and India semi-permeable and crossing the India-Bangladesh border at Petrapole-Benapole, the most important border post between the two countries, takes several days while 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 highlighted, which added that at present Indian trucks are not allowed to transit through Bangladesh and as a result, the northeast of India is particularly isolated from the rest of the country and connected only through the 27-km-wide Siliguri corridor, also called ‘chicken’s neck’.
This leads to long and costly routes as goods from Agartala, for example, travel 1,600 kilometres through the Siliguri corridor to reach Kolkata Port instead of 450 kilometres through Bangladesh and if the border were open to Indian trucks, goods from Agartala would have to travel just 200 kilometres to Chittagong Port in Bangladesh, and transport costs to the port would be 80 per cent lower, the report estimates.
Further, according to the report, all districts in Bangladesh would benefit from the integration, with the eastern districts enjoying larger gains in real income even as Indian states bordering Bangladesh, such as Assam, Meghalaya, Mizoram and Tripura in the northeast, 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 while the countries also need to address a number of challenges, such as infrastructure deficits, particularly in designated border posts, harmonisation of regulations and customs procedures, the report stated.
FTA with India: Could it be the game changer?
According to the report, a free trade agreement (FTA) could increase Bangladesh’s exports to India by 182 per cent and by 126 per cent the other way round while improving transport connectivity could take it even further, by 297 per cent and 172 per cent respectively, it said while also making policy recommendations pertaining to standardising infrastructure design, expanding the effective capacity of core transport and logistics infrastructure along regional corridors, ensuring competition in transport service markets, deploying modern information technology infrastructure at land ports and seaports and developing off-border custom clearance facilities in Bangladesh and India, to improve the regional connectivity further.
And now with the opening of the Maitri Setu, things are expected to make rapid and significant development in this direction; or will it actually?
“We expect that the framework we are inaugurating today will also help Bangladesh trade more easily not only with India, but with Nepal and Bhutan as well,” said Hasina at the virtual inauguration of the bridge while underlining it will also play a significant role in business, trade and economic development, and went on to add, “We are creating a new era in South Asia through providing connectivity to India. We are in a region which has remained conservative in opening up and where inter-regional trade is far below its potential.”
It may be mentioned here that Bangladesh on 6 December 2020, signed its maiden preferential trade agreement (PTA) with Bhutan to boost bilateral trade between the two countries. Some 100 Bangladeshi products will get duty-free access to Bhutan as part of the same, which include baby clothes and clothing accessories, men’s trousers and shorts, jackets and blazers, jute and jute goods, leather and leather goods, etc., while 34 Bhutanese products will get duty-free access to the Bangladeshi market.
Meanwhile, in a bid to increase bilateral trade, Bangladesh and Nepal are also likely to sign a preferential trade agreement or PTA soon, and once signed, Nepal will be the second country with whom Bangladesh goes for the free trade agreement even as after months of discussion on the duty-free product-access to each other markets, both countries have reportedly agreed to sign the deal.
In light of the above developments, the inauguration of the Maitri Setu gains even more significance.However, if some experts are to be believed, there still remain some challenges towards exploiting the full benefits of the same.
Ramgarh Land Port impediment towards exploiting the Maitri Bridge opportunities!
The inauguration of the 1.9kilometre-long Indo-Bangla Maitri Bridge 1 has opened a new horizon of possibilities for bilateral trade between the two countries as the bridge will reduce the cost and time of transporting goods as Bangladesh will have direct connectivity with seven states, including Tripura and Mizoram, in India.However, the benefits of this bridge cannot be fully enjoyed as the construction of Ramgarh Land Port has yet to be completed, underlined some experts.
Project officials said that the construction of the infrastructure and installations have not started yet and it will take 2.5 years more to complete the land port while according to the port authorities, it will not be possible to import and export goods from there until the land port is operational.
It may be mentioned here that Ramgarh Land Port is being constructed under the Bangladesh Regional Connectivity Project 1 on the left bank of the Feni River in the ward number 9 of Ramgarh municipality in Khagrachhari district of the Chittagong Hill Tracts and as per the Director of Bangladesh Regional Connectivity Project 1 Md Sarwar Alam (Joint-Secretary),there are plans to start construction of the port infrastructure from 1st July even as he maintained the deadline for completion of this work is 30 June 2023.
“There is no opportunity to import and export goods until this infrastructure is built. In order to start import and export, the goods have to be unloaded at the port, which is not possible if the port is not fully prepared. And we have to wait for it for at least two-and-a-half years,”reportedly stated Md Sarwar Alam, adding, “Tenders were called for the construction of the land port at the end of last December. Interested contractors were asked to apply by 28 February this year. In the meantime, seven well-known local and foreign contractors have expressed interest and applied. Now their applications are being evaluated. After the verification and selection, only the appropriate company will be given permission to build the land port.”
The land port will reportedly be constructed at a cost of Taka140 crore with the funding of the World Bank. However, if necessary, this cost may increase further even as the infrastructure to be built at the land port includes: a boundary wall and gate houses; a one-stop port building; dormitories; toilets; a labour shed; a watchtower; a transhipment shed and warehouses; RCC pavement; stack yards; and a pedestrian overpass.
It also includes internal electrification and sanitation work as well as the installation of necessary electrical equipment and utilities.
Ports too pose a hurdle…
Seamless transport connectivity between Bangladesh and India will largely help Bangladesh tap into new business opportunities for which ensuring efficiency of the ports which are in the making should be the order of the day and according to experts and businessmen, if Bangladesh is not well set to handle an increased volume of export-import trade in the wake of connectivity, it will weigh heavily on local trades while the ports will face huge congestions as waiting time for vessels will increase and foreign vessels will be reluctant to use such route sowing to unusual delays.
However, the Chittagong Port Authority (CPA) — Chittagong Port, the main port of the country, handles 92 per cent of the country’s booming export-import trade — and Payra Port Authority have said they are preparing to avail the ensuing opportunity.
As per report, the port (Chittagong), which has handled 3 million TEUs (twenty-foot equivalent units) worth of containers last year, will be able to handle over 7 million containers by 2026 once Patenga Container Terminal, Matarbari Deep Seaport and Bay Terminal are completed even as the under-construction Payra Port is expected to be fully functional by 2030 and will be able to handle 4-5 million TEUs worth of containers by 2035.
It may be mentioned here that for freight and passenger transportation, Bangladesh already has got five rail routes with India, which are Benapole-Petrapole, Darshana-Gede, Rohanpur-Singhabad, Birol-Radhikapur, and Chilahati-Haldibari while the Akhaura-Agartala and Dhaka-New Jalpaiguri train services are scheduled to open soon even as additionally, the two countries now have nine roads and eight air routes.
“Bangladesh will reap commercial benefits in the wake of this connectivity. However, it has to ensure services at the ports to make that happen,” stated Prof Moinul Islam, former President of Bangladesh Economic Association, adding, “The country will not achieve national income of as much as 16.6 per cent overnight; it will increase gradually. It has a huge potential to tap once its ongoing projects are completed.”
Meanwhile, as per the CPA, by the next five to six years, the cargo handling capacity of the port is expected to rise to over 7 million TEUs even as Omar Faruk, Secretary of the port authority, said,“We are increasing our capacity. By this time, we have carried out a trial run with India under a transhipment agreement. We are getting ready to tap into the opportunity,” who further added that the Karnaphuli tunnel will help in ensuring swift communication with Cox’s Bazar and Tripura via Feni, while underlining that it would also reduce pressure on highways because of the long marine drive from Mirsarai to Teknaf even as the country’s business community look at seamless connectivity as a good step forward towards booming of local businesses.
Nevertheless, at the same time they also suggest developing the ports’ capacity first, or else local trade will be under pressure as a result of congestion at the ports even as AM Mahbub Chowdhury, Vice-President of the Chittagong Metropolitan Chamber of Commerce and Industry on his part said that even after goods reach the Chittagong Port, it takes over 15 days to have them unloaded from vessels, which results in huge losses for traders.
“We have to bring about a huge change to the container handling system at berth. Surprisingly, one berth operator company is handling six New Mooring Container Terminals, which is the cause for the delay in unloading containers in the port,” said the business leader while calling for the Prime Minister’s direct intervention in developing an efficient port.
Indo-Bangla trade time through Petrapole land port extended
Meanwhile, even as the Maitri Setu was inaugurated virtually, on the other hand in another positive development, the timing of trade between India and Bangladesh through West Bengal’s Petrapole land port by has been extended by three hours till 11 pm every day.
The Indian Customs department has extended the timing of trade between India and Bangladesh through West Bengal’s Petrapole land port by another three hours till 11 pm every day, as part of the ongoing exercise of easing Covid-19 restrictions, officials said while adding that the move is aimed at reducing the number of trucks stranded at the land port.
It may be mentioned here that according to the Covid-19 protocol, the movement of trucks through the integrated check-post at Petrapole, about 80 kilometres from Kolkata, was allowed till 8 pm even as the District Magistrate of North 24 Parganas has permitted an extension of time for export and import.
On a normal day, 500-550 trucks cross the border there from India and about 100-150 come from Bangladesh, Petrapole Exporters and Importers Welfare Association President Paritosh Biswas said. “Now, only 250-275 trucks move to Bangladesh through Petrapole land port, the largest facility on the Indo-Bangla border,” Paritosh said, adding, “The number of Bangladesh-bound trucks that cross the border daily through Petrapole have reduced significantly. Cargo-laden vehicles get stranded for 20-25 days even though facilities such as electronic filings are in place and a dedicated export road has been developed,” he alleged.
Instead of extending the time for trade between the two countries, the customs department should set a target for the Petrapole land port authorities to clear a specific number of stranded trucks, which could be useful for exporters, advised Paritosh.
So, even as India and Bangladesh have written a new chapter in mutual trade and relationship with the inauguration of the Maitri Setu, there reportedly still remains some issue with India’s new customs rules as well.
What’s the latest on India’s new customs rules?
Dhaka has requested New Delhi not to apply new customs rules on goods exported from Bangladesh, citing it as a violation of conditions under the South Asia Free Trade Area (SAFTA) agreement even as New Delhi, on the other hand, has reportedly said its new customs rules will apply to all countries. However, if a problem arises in exporting any Bangladeshi goods to India owing to these rules, it will be resolved through a case-to-case discussion.
The Indian Customs Rules that took effect in September last year aim to administer the rules of origin under all trade agreements signed by India.
At the Commerce Secretary-level talks between the two countries recently, Bangladesh asked India to play an active role in making SAFTA effective (Under the SAFTA agreement, Bangladesh enjoys duty-free access to all 25 products relating to tobacco and alcohol in India) even as because of the India-Pakistan standoff, no SAFTA meeting has reportedly taken place since 2015.
After the meeting, Commerce Secretary Jafar Uddin said, “We have proposed making regional forums, including SAFTA effective. We also discussed the introduction of a free trade system between SAFTA member countries to meet challenges after coming out of the least developed country status.”
Further, officials of both countries have reportedly agreed on signing a memorandum of understanding called trade remedial measures to resolve various issues in bilateral trades even as according to media reports, an Additional Secretary of the Commerce Ministry, who was present at the secretary-level meeting, reportedly underlined the MoU can be signed within the next six months even as preparations are on to sign the proposed Comprehensive Economic Partnership Agreement between the two countries while both sides are currently examining the deal’s viability.
The two Commerce Secretaries decided to complete the survey within the next six months as they want to sign the agreement by next year even as Bangladesh has also proposed accepting certificates issued by the Bangladesh Standards and Testing Institution, setting up labs in the Indian parts of the land ports for testing product quality and expanding border haats on the Meghalaya border while on the other hand, India has demanded expanding regional connectivity, giving opportunities to export textile products, including yarn, through land ports.
Now with Indian Prime Minister Narendra Modi scheduled to visit Dhaka as a part of the golden jubilee celebrations of Bangladesh’s independence and the birth centenary of Bangabandhu Sheikh Mujibur Rahman, Indo-Bangla relations, or shall we call it the joint front, is set to reach new heights, which would ultimately be in the interest of both the countries for sure