A recent report by the World Bank titled “Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia” suggested significant economic benefits of seamless transport connectivity between India and Bangladesh, which could boost national income by up to 17% in Bangladesh and 8% in India. The report centres its analysis around the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement (MVA).
Key Challenges to Trade
Bilateral trade is notably limited, contributing to just 1% of India’s trade and 10% of Bangladesh’s trade. This figure is starkly lower than that of East Asian and Sub-Saharan African economies where intraregional trade accounts for 50% and 22% of total trade respectively. Trade barriers such as high tariffs, para-tariffs, and non-tariff barriers obstruct smooth trading across borders.
Border Crossing Difficulties
Weak transport integration complicates the crossing of India-Bangladesh border, particularly at Petrapole-Benapole, the leading border post between both nations. Crossing this border often takes days, contrasting with other regions, such as East Africa, where similar border crossings take under six hours.
The Northeast Isolation Issue
The inability of Indian trucks to transit through Bangladesh leaves India’s northeast region isolated, connecting only through a narrow 27-km-wide Siliguri corridor, also known as the “chicken’s neck”. This leads to extended and expensive routes.
Potential Benefits of Enhanced Connectivity
Improved connectivity would have numerous economic benefits. All districts in Bangladesh, especially eastern districts, would gain from integration. Indian states on the Bangladesh border, like Assam, Meghalaya, Mizoram, Tripura, and West Bengal, as well states farther away like Uttar Pradesh and Maharashtra, could gain economic benefits from seamless connectivity.
Increased Real Income and Exports
Enhanced connectivity could lead to a 297% increase in Bangladesh’s exports to India and a 172% rise in Indian exports to Bangladesh. It would also boost real income across all districts in Bangladesh.
Strategic Importance of Bangladesh
Bangladesh’s geographic location gives it strategic importance as the gateway to India, Nepal, Bhutan, and other East Asian countries. By improving regional trade, transit and logistics networks, Bangladesh has the potential to become an economic powerhouse.
Recommendations for Improvement
The report recommends strengthening the MVA, expanding the capacity of core transport and logistics infrastructure, integrating local communities and fostering women’s participation in export-oriented agricultural value chains. Strategies also include digitizing trade and transport documents, liberalizing selection of trade routes, and developing off-border custom clearance facilities.
About the BBIN and the MVA
The Bangladesh, Bhutan, India, Nepal (BBIN) Initiative is a sub-regional collaboration aimed at implementing and reviewing comprehensive agreements across sectors including connectivity of power, water resources management, transport, and infrastructure. The MVA, signed in 2015, seeks to facilitate unrestricted cross-border movement of goods and people among member nations. However, its implementation has been delayed due to certain provisions that require clarification. Its ultimate objective is to foster economic interaction and seamless people-to-people contact by facilitating cross-border movement of people and goods.
Last Modified: February 11, 2024