Its current state
The second half of the last century saw the emergence of a number of regional and sub-regional economic cooperative arrangements among countries, across the globe. A realisation that no nation big or small, rich or poor can fully realise its potentials in political and economic terms by seeking to work in isolation led to the formation of such regional economic cooperative arrangements.
In a globalised economy, transport cost being a significant determinant of competitiveness; it makes an integrated and efficient transport network an essential element of the enabling environment. The integrated transport infrastructures which South Asia inherited from the British, got fractured initially by the partition of India, and subsequently by its political aftermath and now needs to be integrated again. Such integration is especially crucial to countries such as Nepal and Bhutan and the territory such as North East India, for providing shorter transport connectivity and convenient access to the outside world.
Before 1947, trade from NE India used to pass through territories of what is now Bangladesh. Rail and inland water transport (IWT) transit traffic movement across the then East Pakistan continued till the Indo-Pakistan 1965 war, and then suspended. After liberation of Bangladesh, transit only by IWT was restored, but restriction on movement of transit traffic by road and rail continued.
However, a real breakthrough came only recently, when a Joint Communique was signed by India and Bangladesh in New Delhi on January 12, 2010 following a historic India-Bangladesh Summit. The Joint Communique has set the tone to achieve a long lasting cooperation in transport connectivity in the northeastern sub-region of South Asia.
Recent initiative for enhanced connectivity in Northeastern sub-region of South Asia
Bangladesh and India signed a Joint Communique on 12th January, 2010 immediately following an India-Bangladesh Summit held in New Delhi. In respect of transport connectivity, the Joint Communique brought the real breakthrough where agreements were reached for the following:
* Use of Mongla and Chittagong Sea Ports by India, Nepal and Bhutan;
* Making available the Rohanpur/Singabad-Kathihar-Rauxal-Brigunj broad gauge rail link for movement of Nepalese third country trade through Mongla Sea Port, as well as for bilateral trade between Bangladesh and Nepal;
* Construction of Akhaura-Agartala rail link;
* Designation of Ashuganj as a new port of call and its development as a transshipment port for Indian transit traffic by IWT and then for onward movement to Tripura by road transport; and
* Allowing bilateral trade between India and Bangladesh to be carried in containers through rail and IWT routes.
* Following the Joint Communique, a number of initiatives were taken by several government agencies and think tanks to assess the impacts in terms of (a) likely transit traffic which could move across Bangladesh; (b) present state of regional transport connectivity; (c) identification of possible routes by all surface modes for movement of transit traffic; and (d) extent of benefits that each of the participating countries (Bangladesh, India, Nepal and Bhutan) could get from regional connectivity.
Potential traffic diversion scenario
A number of studies undertaken immediately following the Joint Communique, revealed that due to geographical proximity, and convenience of transport connections, certain states of NE India would find it convenient and cost effective as well as time effective to use Bangladesh’s road, rail and IWT networks (See map). The map indicates the location of North-East Indian states around Bangladesh, which have the convenience of location and transport connectivity through Bangladesh to other parts of mainland India.
With regard to an estimation of likely traffic diversion, CPD-SACEPS study of 2011 indicated that total potential transit and international traffic from NE Indian states would be around 18 million tonnes, of which inter-state transit traffic would be around 16 million tonnes and international traffic (including Nepal and Bhutan traffic) would be around 2 million tonnes.
Present state of transport connectivity
At present the regional connectivity in the Northeastern sub-region of South Asia is so poor that for bilateral trade between India-Bangladesh, Bangladesh-Nepal and Bhutan-Bangladesh, goods are required to be transshipped at the border between trucks. No inter-country freight trains move across the India-Bangladesh borders. However, a passenger train called “Maitree Express” runs between Dhaka and Kolkata, twice a week in each direction. In case of freight trains between India and Bangladesh, rail wagons are pulled by Indian locomotives up to the border and Bangladesh Railway (BR) locomotives pull these to various destinations within the country.
NE India is virtually a landlocked territory, and traffic from that area is required to travel 1,400-1,650 km to reach the only port, Kolkata. If political understanding is reached between India and Bangladesh, and transit is allowed, distances across would come down to around 450-700 km.
The consequences of poor connectivity are huge for Bangladesh as well. A 20ft container takes at least 30 days to move between New Delhi and Dhaka, and costs around US$2,500, but by rail it could reach Dhaka in 4-5 days, and would cost around US$850. The situation, however, is likely to change soon, because container movement by railway has now been allowed as part of the Joint Communique signed by Bangladesh and India in January, 2010. But restriction on Jamuna Bridge for additional trains will still continue as a constraint, till a new rail only bridge is constructed, which may take 5-7 years.
In the light of the situation highlighted above, it is crucial that transport connectivity is established sub-regionally to bring a win-win situation for all the countries involved in the Northeastern sub-region of South Asia, namely Bangladesh, Nepal, Bhutan and NE India.
Possible routes for regional connectivity
In late 2010, the government of Bangladesh (GoB) set up a high-level Core Committee to look into transit issues amongst Bangladesh, India, Nepal and Bhutan. Five sub-committees were set up to work on various aspects involved. Subcommittee-I has been working on identification of possible routes for transit traffic. Based on a review of the major routes identified for regional connectivity by the SAARC Regional Multimodal Transport Study (SRMTS), completed in 2006, 17 routes were identified for development, in phases. The GoB Core Group study, however, indicated that all these 17 routes cannot be operationalised immediately because several of these routes are suffering from acute infrastructural deficiencies.
In view of the above situation, one of the think- tank studies, known as CPD-SACEPS study of 2011, selected 13 routes for further investigation keeping in view their high potential for quick development and operationalisation. A list of these 13 routes is shown in Table-1.
Major constraints to be addressed
In order to operationalise the identified routes, an assessment was made of the various constraints en-route. In the context of road network, the major constraint is that Bangladesh roads have only two lanes, and these were designed for an axle load of 8.2 tonnes. As such, Indian heavily loaded trucks cannot be allowed to ply on these roads, until expressways with higher loading standards are built along the national highways, which have the average right of way (ROW) of around 40 metres or more. Progress with regard to widening major highways has also been very slow, including that of a four-lane of Dhaka-Chittagong highway. In view of the above weaknesses of the road sector, only a small share of transit traffic can be carried by roads.
With regard to rail routes, major constraints include weight restriction on Jamuna Bridge, where there is also a restriction on the “number of trains” that can cross the bridge per day. Other constraints include lack of rail connectivity with NE India, because Kulaura-Shahbazpur/Mahishasan (39 km) rail link along Akhaura-Kulaura-Karimganj route has not been recommissioned as yet. A new rail link between Akhaura-Agartala (10 km) is still being built. In addition, Dhaka-Chittagong rail link is also suffering from capacity constraints, as the progress in doubling the track is very slow. One more constraint is the lack of rail connectivity between Khulna and Mongla port, which has now been included under Indian Line of Credit (LOC) of US$1 billion.
In the context of IWT route, major constraint for movement of transit traffic between Kolkata and NE India, is the lack of a transshipment port at Ashuganj. The project has now also been included under Indian Line of Credit (LOC). To make this IWT route fully competitive, an improved road link (35 km) also needs to be built between Ashuganj-Akhaura/Agartala.
In order to make all the priority routes operational, an assessment was made of the major projects which are required to be implemented by the government of Bangladesh (GoB), on priority basis. These are listed in Table-2.
A detailed assessment indicates that Bangladesh will need around 3-5 years to put its transport system in full gear to carry both national and anticipated transit traffic. While awaiting implementation of major rail and IWT projects, initially around 10 percent of transit traffic could perhaps be carried by road, on transshipment basis or consider using Joint Venture Trucking Company (JVTC) approach. Under this approach, JVTC could be set up by Bangladesh road transporters with shareholders in India, Nepal and Bhutan, with double registration (i.e. vehicles registered both in Bangladesh and India) for the company's multi-axle vehicles (truck trailers, covered vans, etc.). Double registration will allow these vehicles to pick up containers from origins inside India, Nepal and Bhutan, and move across Bangladesh to deliver goods to destinations inside India or to Bangladesh ports, without any transshipment at the border. This system could cut down transport costs appreciably. Setting up of such a company and for its smooth operation, strong political support of the four governments, would however, be essential.
Bangladesh, however, shall have to mobilise around US$ 5-6 billion, excluding Padma Bridge, over the next 5-7 years to improve its national transport system to create enough capacity to carry both the national and the transit traffic. This is indeed a big challenge for Bangladesh.
Likely benefits of the regional connectivity
The CPD-SACEPS study worked out the comparative cost of moving goods from NE India to Kolkata region along new routes through Bangladesh vis-à-vis the cost along the existing route via the “chicken neck”. The results of the analysis are shown in Table-3. The table shows the extent of benefit that the territories/countries involved (NE India, Nepal and Bhutan) could get by moving their goods along the new routes through Bangladesh.
Operationalisation of the regional connectivity
Regional transit transport framework agreement needed
It is crucial to have a political consensus among the countries concerned to operationalise the priority routes for actual movement of regional traffic.
Both hardware and software infrastructures are required for smooth movement across the border. On the hardware side, the priority routes identified must be in good condition along with border crossing facilities, namely parking space for the vehicles, waiting room for the passengers, gas/petrol stations, cafeteria/eating places, toilets, banks, telephone facilities, and well designed customs and immigration offices. But most of the land ports between Bangladesh-India, India-Nepal and India-Bhutan lack many of the facilities mentioned.
In order to honour GoB's commitment to allow transit traffic to move across Bangladesh, immediate high priority attention needs to be given to completion of the major projects listed in Table-2.
With regard to software infrastructure, except India-Nepal and India-Bhutan, there is no software in place, in terms of transport and trade facilitation agreements, to facilitate smooth movement of goods and vehicles between India-Bangladesh, Bangladesh-Nepal, and Bangladesh-Bhutan.
SAARC Initiative to facilitate movement
In the context of South Asia, the SAARC Secretariat circulated a draft “Regional Motor Vehicles Agreement” and another draft “SAARC Regional Railways Agreement” for consideration of its members states.
The SAARC Secretariat also got an “Expert Group” established with representatives from all SAARC countries to negotiate the above mentioned draft Regional Agreements. The first meeting of this expert group was held in the SAARC Secretariat in Kathmandu on 1-2 February 2010, where some preliminary comments were exchanged. A second meeting of the Expert Group was held on April 12-13, 2010, where some progress has been achieved in respect of a Railway agreement. Since then considerable progress has been reported in respect of a Railway agreement, which may get adopted very soon. Progress in respect of “Motor Vehicle Agreement” has, however, been very slow.
New initiative needed to facilitate movement
Since the progress in respect of the SAARC Motor Vehicle Agreement has been very slow, to operationalise regional connectivity in the Northeastern sub-region of South Asia, the countries concerned namely, Bangladesh, India, Nepal and Bhutan should together go for a new regional transit transport framework agreement similar to those adopted by ASEAN, ECO and GMS, sub-regions. India and Bangladesh could perhaps jointly approach the Asian Development Bank (ADB) for technical assistance in drafting the above mentioned regional transit transport framework agreement.
During drafting of the above agreement, it would become very clear as to the areas where protocols would be required. If ADB agrees to assist, the technical team which would be drafting the framework agreement should be in a position to draft the protocols as well.
Transit charges to be levied
International trade often requires the crossing of goods across and through territory of other States. Article V of the GATT 1994 provides for the freedom of transit of goods, vessels and other means of transport across the territory of another WTO country via the routes most convenient for international transit.
Under WTO provisions, transit country can charge “transit charges” for the use of the infrastructure, facilities and transport services. These charges could include, among others, return on investments in the infrastructure, rolling stocks, vehicles, operating costs of transport services, maintenance costs of infrastructures and other associated facilities and assets, environmental and congestion costs, administrative and management costs of infrastructure and services, etc.
The GoB-established high-level core committee on transit issues has already completed a study on likely transit charges, which needs to be further discussed at different levels before finalisation.
Article V of GATT 1994, however, refers to only through transit i.e., Transit in GATT context normally involves at least three countries/states. In the case of NE Indian transit traffic, only two countries are involved, as traffic is originating in India and terminating in India, after transiting through Bangladesh. As such, it is a “special type of transit facility” that India has been asking for, from Bangladesh. The issue, therefore, needs to be sorted out bilaterally.
But the question arises as to why NE India, although not a landlocked territory, still wants to transit through Bangladesh. It is because there would be large savings in transport costs and time? Now a question arises as to who should get the benefit of this savings in transport costs and time. Should it be Indian traders only? Should not Bangladesh get a share? The share of the transport cost savings that Bangladesh should claim, could be termed as “transit fees”.
In this context it may be noted that in addition to cost savings, there would be considerable time savings too, which Indian traders will get. At the initial stage, Bangladesh may not raise any question on this issue, as it can be addressed later.
Finally, in order to avoid accounting complications, the “transit fee” component should be subsumed under “transit charges”, which will be levied to the vehicles that will use transit routes through Bangladesh.
The way forward
Transit traffic from NE India, Nepal and Bhutan would find it attractive to pass through Bangladesh, and use its ports, as the savings for each tonne of diverted traffic could range between 12 percent to 80 percent depending on the route being used. Establishment of regional connectivity would, therefore, create a win-win situation for all the countries concerned. To operationalise regional connectivity, both improved infrastructure as well as efficient facilitation measures, in the form of a 'Regional Transit Transport Framework Agreement' need to be in place.
Bangladesh will need around 3-5 years to put its transport system in full gear to carry both the national and the anticipated transit traffic. Initially, railway and IWT shall have to carry most of the transit traffic, until expressways are built along national highway routes. While awaiting improvement of rail and IWT, initially around 10 percent of transit traffic could perhaps be carried by road, on transshipment basis, or by using Joint Venture Trucking Company (JVTC) approach.
To expedite utilisation of the US $ 1.0 billion Line of Credit (LOC), loan processing mechanism in India needs streamlining. Bangladesh shall have to mobilise around US$ 5 to 6 billion to improve its national transport system to create enough capacity to carry both the national and the transit traffic. This is indeed a big challenge for Bangladesh.
Since the transport costs per tonne along the existing routes via the “chicken neck”, are very high, compared to the proposed transit routes through Bangladesh, there would be large savings in transport cost for Indian transit traffic. India should share this transport cost savings with Bangladesh.
To improve facilitation measures, countries concerned (Bangladesh, India, Nepal and Bhutan) need to take an urgent political decision to go for a “Regional Transit Transport Framework Agreement (RTTFA)”, within the SAARC framework, if needed.
Finally, as a way forward and to achieve concrete results, the countries concerned need to work as a team and address various problems together to ensure seamless movement across the sub-region.
The writer is former Director, Transport & Infrastructure, UN-ESCAP, Bangkok.