Seminar on "Improved Connectivity: Unlocking Economic Potential between India & Bangladesh" বিবৃতি ও বক্তৃতা

Seminar on "Improved Connectivity: Unlocking Economic Potential between India & Bangladesh"

Seminar on "Improved Connectivity: Unlocking Economic Potential between India & Bangladesh"

H.E. Dr. Mashiur Rahman, Economic Affairs Adviser to the Hon'ble Prime Minister of Bangladesh

Barrister Md. Sameer Sattar, President, Dhaka Chamber of Commerce & Industry (DCCI)

Leaders of Business and Leading Business Chambers of Bangladesh

Ladies & Gentlemen,

1.     It gives me great pleasure to be here at this seminar today, with discussions centered on improving connectivity to unlock the economic potential between India and Bangladesh.

2. Under the visionary leadership of Hon’ble Prime Minister Narendra Modi and Hon’ble Prime Minister Sheikh Hasina, our bilateral relationship has transformed significantly. In the last decade, we have made substantial progress in advancing relations between India and Bangladesh. Our trade and commercial ties and connectivity have also grown in tandem with the progress made in the overall bilateral relations.

3. On the trade front, we have come a long way. Today, Bangladesh is India’s biggest trade partner in South Asia. In the last five years, bilateral trade has grown from USD 7 billion to around USD 18 billion. Bangladesh’s exports to India have crossed the USD 1 billion mark consecutively over the last three years, reaching almost USD 2 billion in the last Financial Year. India, with its diverse market, has emerged as the top export destination for Bangladesh in Asia. Bangladesh is also India’s biggest trade partner in South Asia.

4. India granted duty-free, quota-free access to Bangladesh as a SAARC LDC under SAFTA nearly a decade ago, which has enabled greater exports from Bangladesh to India, particularly from the Readymade Garments (RMG) industry. And as Bangladesh graduates from the LDC status and we move towards a suitable Comprehensive Economic Partnership Agreement (CEPA) to preserve the special bilateral trade relationship, the two way trade will only increase further. Both countries are keen to harness each other’s growing potential to mutual benefit. CEPA would ensure more robust economic linkages between our economies and help enhance our trade and investment ties by creating a new institutional framework and supply chain linkages.

5. Today we live in an inter-connected world with much greater economic integration. India and Bangladesh are geographically a contiguous entity, and therefore connectivity is a natural manifestation as well as a driver of our growing partnership. Both India and Bangladesh are trying to ensure that together we work to revive the age-old routes. For example, of the seven pre-1965 rail linkages, five have been restored with three cross-border passenger trains operating along them. Additionally, multiple parcel and freight trains carry essential commodities and finished goods across the border. We have just begun to realize the multiplier effect of railways in promoting P2P exchanges and trade. In addition, cross-border buses operate along five different routes connecting Bangladesh with Tripura, West Bengal, Meghalaya and Assam.

6. Today, almost 40-45% of our bilateral trade and a significant proportion of people-to-people movement are channeled through thirty four functioning Land Customs Stations, and four Integrated Check Posts between our two countries. Better connectivity is central to improving the ease of doing business and the ease of living, both key priorities of current leadership. Studies indicate that seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17% in Bangladesh and 8% in India.

7. Important steps have been taken in the last two years for improving the trade and immigration infrastructure to facilitate easier flow of goods and people, despite challenges of Covid-19. Initiatives such as inauguration of Maitree Setu connecting Sabroom in Tripura and Ramgarh in Bangladesh by the Hon’ble Prime Ministers and laying of Railway siding at Benapole have been initiated. Government of India has also undertaken upgradation of seven more Land Customs Stations (LCSs) into Integrated Check Posts (ICP) including Dawki LCS where work has already commenced. Similarly, given the importance of Petrapole-Benapole for movement of passengers, a new Passenger Terminal Building – 1 was also inaugurated with a second Passenger Terminal Building in the works. We have also restored and resumed train and bus services that were suspended during Covid.

8. Improvement of infrastructure at LCS & ICPs is indeed a key to increasing economic activity in a mutually beneficial manner. We have commenced construction of the 2nd Cargo Terminal Gate at ICP Petrapole-Benapole that will help double the throughput of vehicles per day. However, there is a need to decongest ICP Petrapole–Benapole by improving infrastructure at other land ports, and there is also a need to increase the number of ports without restrictions, starting with Agartala. Such efforts would naturally crowd-in more investments in the Land Ports thereby boosting bilateral trade.

9. Bangladesh is our largest development partner under Concessional Financing extended by Government of India with nearly USD 9.5 billion committed under the concessional Lines of Credit (LOC) and the Concessional Financing Scheme (CFS). Over the last couple of years, India has become the largest and fastest disbursing development partner of Bangladesh despite the challenges presented by the pandemic.

10. There is need for greater access to and from Bangladesh’s Ports, Inland Waterways and rail and road routes. We also offer Bangladesh options to use our ports, railways and airports to export goods to and from India, and to the world. This includes reusing the empty containers that carry in Indian goods by rail, which is expected to be operationalized soon. The future is in multimodal connectivity–road & rail, inland waterways, and also coastal shipping. The recent launch of the longest river cruise – Ganga Vilas, which traversed through Bangladesh through a 3200 km long riverine passage, is an example of the power of rivers to connect our two countries.

11. Government of India is taking up several projects for augmenting railway infrastructure, both track and signaling related, as railway based transport has a multiplier effect on economic efficiency and returns. Especially during the pandemic, the role of railway in transporting essential commodities via parcel and freight rakes, as well as essential medical supplies such as Liquid Medical Oxygen (LMO), was transformational.

12. While we are looking to improve the connectivity of our Northeastern States with the rest of India through Bangladesh, and on connecting these states to the Bay of Bengal, we are also encouraging transit facilities for Bangladesh to export its products to third countries through specified Land Customs Stations/Airports/Seaports. During the visit of Hon’ble Prime Minister Sheikh Hasina to India in September 2022, the Indian side had reiterated its request to work towards the expansion of the bilateral Coastal Shipping Agreement to include third-country EXIM cargo. Our two countries also agreed to expeditiously explore direct shipping links between the two countries. A recent example of initiatives in this regard is the addition of Delhi airport as a transshipment hub for export cargo from Bangladesh to other countries – earlier it was only Kolkata airport – thereby giving Bangladeshi businesses more options for export to third countries. Another example is the new SOP under which empty CONCOR containers can be back-filled/back-loaded with Bangladeshi exports when returning to India. This SOP is expected to be operationalized in the near future.

13. Given the geographical proximity with the Northeastern States of India, Bangladesh is in the best position to tap into the abundant natural resources and the economic potential of the Northeast. To truly exploit this potential, the number of ports without restrictions will need to be reduced. A starting point can be Agartala-Akhaura Land Port. Such efforts would naturally crowd-in more investments in the Land Ports thereby further boosting bilateral trade.

14. We have also concluded a bilateral Agreement on the use of Chattogram and Mongla Ports whereby goods can be transported from India to India’s Northeastern region and return through the two Bangladeshi Ports. Given the geographical proximity with the Northeastern States of India, Bangladesh is in the best position to tap into the abundant natural resources and the economic potential of the Northeast. The transit/transshipment of goods under this agreement will reduce both cost and time for transport of goods to Northeastern States of India. It will also create economic gains for the Bangladesh logistics and services industry (Insurance, transport and Finance industry etc.) as only Bangladesh trucks will be used for transshipment. To enable regular movement of goods under this Agreement, a permanent standing order/notification would need to be issued by the Government of Bangladesh

15. Connectivity is not limited to just road, rail, inland waterways, and coastal shipping. It also includes energy and digital connectivity. An important example is the India-Bangladesh Friendship Pipeline, a wholly funded Government of India project, which is now ready to transport one million Metric Tonnes Per Annum (MMTPA) of High-Speed Diesel to Bangladesh from a refinery in Assam in a sustainable, reliable and cost effective way manner with a minimal carbon footprint. The second such cross-border pipeline in the sub-region, it will change the diesel supply landscape in Northern Bangladesh and help fuel further development in the region and country. At a time when the world is facing energy shortage & supply challenges, the Pipeline is a vivid example of the cooperation between our two countries contributing to Bangladesh’s energy security. India is also engaged with Bangladesh in its Rooppur Nuclear Power Project, providing technical consultancy and building power evacuation systems.

16. Another important project that has the potential to revolutionize intra-regional electricity trade is the 765 kV cross-border electricity interconnection between Katihar (India) – Parbatipur (Bangladesh) – Boranagar (India). A starting point to develop a synchronous and robust grid interconnection in the sub-region (while India has established grid synchronization with Bhutan and will be achieving the same with Nepal in the coming 2-3 years, India and Bangladesh are still asynchronously interconnected), the 765 kV high-capacity interconnection has the potential to not only help build a robust and stable grid in Bangladesh but also help drive investments in the Renewable Energy Sector.

17. Better connectivity has been the driving force for prosperity the world over. It develops lasting interdependencies and raises the efficiency of economic engagement. Regional and global supply chains are determined and defined by connectivity links and stronger connectivity increases the value, dependability and resilience of supply chains. The need of the hour is to aim towards greater sub-regional cooperation, greater integration and greater connectivity. As far as India and Bangladesh are concerned, the simple fact is that both economies have grown at high rates in the last ten years. This shows that our growth is complementary and mutually reinforcing. We should leverage each other’s strengths and encourage the full play of our comparative advantages.

16 March 2023