Water routes to cut cost of trade with India
The potential for bilateral trade between India and Bangladesh via water routes largely remains untapped due to poor navigability of the rivers, port handling problems, and cumbersome customs procedures, analysts said yesterday.
"A shift to water transport from road transport between Bangladesh and India can cut the costs of transporting goods by $3 per tonne.
But various bottlenecks prevent the use of this opportunity," Syed Monowar Hussain, former secretary of Bangladesh Inland Water Transport Authority, said.
He spoke at a discussion on Bangladesh-India Protocol on Inland Water Transit and Trade (PIWTT): Challenges and Opportunities, at the Metropolitan Chamber of Commerce and Industry.
MCCI and the Indian High Commission in Dhaka organised the programme after the governments of the two countries renewed the tenure of PIWTT in April for a five-year term.
The protocol, signed in 1972, covers eight routes that can carry goods for trade and transit between the two countries, but four traffic routes are mainly used although vessels have to struggle to ply during the dry season because of poor navigability of the rivers in Bangladesh.
Additionally, inbound goods-laden vessels from Kolkata encounter customs checks at four places, while goods transiting to Indian territories face six such inspections.
A lack of support for night-navigation and poor loading and unloading infrastructure at ports also hold back the smooth flow of vessels on the waterways.
As a result, the average turnaround time for a vessel on the Kolkata-Narayanganj-Kolkata route stands at 40 days, Hussain said.
But improvement of navigability, installation of night-navigation facilities, development of port infrastructure and handling facilities, and simplification of customs and regulatory procedures can help cut the time and boost businesses, he added.
Fly ash for the cement industry is a main transportable item on the waterways between India and Bangladesh, and some 19.31 lakh tonnes of such cargo was carried in fiscal 2013-14, Hussain said.
And handling problems at the ports prevent imports of large amounts of cargo like food grains, iron ore, gypsum, oil cake and engines through waterways, he added.
Bangladesh imported items worth $6.03 billion from India, and exported $456 million in fiscal 2013-14, said Mahboob Ahmed, senior business consultant at Shipwrights Resources.
Interestingly, 70 percent of total bilateral trade occurs through the Benapole Land Port with 450 trucks passing through the port a day even as a further 400 to 500 trucks wait in queue across the border for days.
Inversely, the PIWTT routes service less than 0.3 percent of total bilateral trade between the countries, he added.
Domestic passenger and cargo traffic on roads have been increasing at 7-8 percent a year over the last 15 years, a trend which is set to choke up the country's highways by 2022, Ahmed warned.
"Depreciation costs will skyrocket and the movement of cargo by road will become extremely difficult."
A shift to water transport could address the problem, for which, investment in improving rivers' navigability and introduction of flat bottom shallow water barges capable of carrying containers, like Vietnam, can act as appropriate boosters, he said.
The PIWTT protocol and issues like handlings facilities, customs procedures have not received the attention they deserve, which has undermined the system, said Pankaj Saran, high commissioner of India.
India prioritises the use of water ways as a means of national transportation within India; this is a good time to cooperate and make a strategic shift towards water transportation, he said.
One aspect is a need for hefty investment into dredging the river routes to increase navigability, which is a task too big to take on alone, he said.
"We have, in fact, officially proposed Bangladesh to jointly approach the World Bank to fund the dredging activities," Saran said.
"We made a breakthrough in coastal shipping. Road transport capacity is getting saturated, which is true to both India and Bangladesh.
This coastal shipping move is significant, and its real implications are yet to be understood by all players."
Also, India recognises that there will be fees, and service charges that need to discussed, Saran said.
"As a sovereign nation, Bangladesh has a right to charge transit fees, but it also has to keep in mind whether the transit fee is proportionate to market capacity."
There will be no transit if fees are too much for the consumers, he said.
The existing protocol offers enormous opportunities for faster growth of trade and commerce between Bangladesh and India, said Syed Nasim Manzur, president of MCCI.
Since transit and connectivity are long term multidimensional issues, it would be better to work towards a comprehensive treaty embracing water, rail and road connectivity as well as multi-modal transport connectivity, he said.
"Till that happens, the existing water protocol, suitably amended, could serve as an interim arrangement."
Mashiur Rahman, the prime minister's adviser on economic affairs, said the navigability issue has been neglected for long, although it can still be addressed through dredging, which requires large investment.
The two governments can try to work on the transport issues in an incremental and multi-modal manner, Rahman said.
“By an incremental progress, I mean that railways and roads can perhaps be merged into the same agreement. I do not think that should happen before the Indian prime minister's visit, but that can trigger a consultation towards reaching such an arrangement.”
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