India, Bangladesh gain as goods flow from Kolkata to Northeast states via Chittagong

The trans-shipment exercise between Kolkata and India’s northeastern states via Bangladesh will open up a new horizon for both South Asian giants that share the fifth longest land border in the world. The distance between Kolkata and Agartala by road is treacherous. The 1650 kilometre land route is through Guwahati but through the Bangladesh waterways, it is only 620 km. Therefore transporting goods via Bangladesh saves time and cost for Indian logistics service providers.

Bangladesh is also set to extend its agreement allowing India to transport fuel to its northeast through its territory. The agreement, signed between the state run Indian Oil Corporation and Bangladesh government in August after several parts of the northeast were flooded due to heavy rains, will expire on November 30.

Despite being closely linked, South Asia as a region is one of the least connected. “In South Asia, transport and trade challenges mean that it is about 15-20 per cent less expensive for an Indian company to trade with a counterpart in Brazil or Germany than in Bangladesh.  Improved connectivity can reduce trading costs, lead to greater economic growth, and reduce poverty in South Asia,” Cecile Fruman, Director, Regional Integration and Engagement, South Asia told India Narrative in an interview.

As New Delhi concluded its trial trans-shipment exercise on Monday, using Bangladesh’s Chittagong and Mongla ports to transport goods to its northeast — much ahead of the December deadline–Bangladeshi private sector is also upbeat. The exercise will benefit a host of businesses while boosting overall income levels. The Bangladesh exchequer will stand to benefit too.

“India is committed to unlock the potential of the region with connectivity for greater economic growth with the spirit of shared prosperity. Who wouldn’t benefit from a shorter supply chain? Bangladesh and India are in tandem for facilitating landlocked northeastern states including opening up for Nepal and Bhutan,” geopolitical and security analyst Navita Srikant told India Narrative.

Srikant added that ASEAN to Bay of Bengal economies are now coming closer as several economic frameworks such as BIMSTEC and Bangladesh-Bhutan-India-Nepal (BBIN) along with India’s Act East policy have started to pay dividends.

Abdullah Sadi, Bangladeshi researcher at Boston University wrote in an article published by the Business Standard (Bangladesh) that in the last four years, Dhaka has earned Taka 36 lakh from 17 consignments through the Kolkata-Ashuganj-Akhaura route.

Last month alone the total income of the government and private sector from the shipment of goods from Kolkata to Assam using Chittagong port was more than Taka 2 lakh, he noted.

The transit agreement was signed between India and Bangladesh in 2018. The agreement is aimed at facilitating transhipment and use of Mongla and Chittagong ports. This would mean that goods from Kolkata can be sent to the land-locked northeastern states through Bangladesh, an exercise that will reduce both transit cost and time.

Also read: Bangladesh’s garment exports to India are increasing

Sheikh Hasina, symbol of a progressive Bangladesh, has an unfinished agenda