Multimodal Connectivity between India and Bangladesh বিবৃতি ও বক্তৃতা

Multimodal Connectivity between India and Bangladesh

High Commissioner’s Remarks

At the Seminar on

"Multimodal Connectivity between India and Bangladesh"

02 May 2023


Prof. Dr. Atiur Rahman, Former Governor, Bangladesh Banks and Chairperson of Unnayan Shamannay 

Session Chair Prof. Dr. Delawar Hossain from Dept. of International Relations, Dhaka University

Distinguished Panelists,

Business leaders, experts from academia, 

Ladies and Gentlemen,

1. I would first like to thank Dr. Atiur Rahman for taking this initiative and giving us a platform to deliberate on a topic that holds long-term significance for both India and Bangladesh and reaffirms our belief that the progress and prosperity of our two countries are interlinked. We are fortunate to be guided by Dr. Rahman’s vast experience as an economic policymaker and as someone who has long been engaged in building economic bridges between India and Bangladesh. I also thank all the distinguished panelists and experts for their time to join us in this important discussion.

2. Improving connectivity and promoting multimodal connectivity is the key to unlock the true potential of our cooperation and take our economic, cultural and people-to-people connections to a new era commensurate with the 21st century hopes, expectations and aspirations of our people.

3. We are all aware of the transformative changes that have taken place in India-Bangladesh relations under the visionary leadership of Hon’ble Prime Minister Narendra Modi and Hon’ble Prime Minister Sheikh Hasina. In the last decade, we have made unprecedented progress in advancing relations between India and Bangladesh. And one of the key manifestations of that transformation has been the growth in our trade and economic engagement and our connectivity links.

4. As India and Bangladesh continue to take strides to become economically stronger – with Bangladesh aspiring to become an upper middle-income country by 2031 and a developed country by 2041, and with India focussed on joining the ranks of developed countries by 2047 – there are new opportunities emerging for our cooperation built upon our new capabilities.

5. On the trade front, we have come a long way. Today, Bangladesh is our largest trade partner in the region and the fifth largest partner in the world. In the last five years, bilateral trade has grown from 7 billion dollars to over 15 billion dollars. Contrary to the impression that the trade relationship is structurally flawed, India has given duty-free, quota-free access for Bangladesh for all except three types of goods – liquor, arms and tobacco products, under SAFTA for a decade now, which has enabled greater exports from Bangladesh to India, particularly from the Ready-made Garments industry.

6. And while it is true that the trade balance is tilted in India’s favour, it is important to understand that a very large amount of India’s exports constitute inputs upon which considerable value is added to earn a large share of Bangladesh’s export income. Indeed, with its diverse market, India is today Bangladesh’s largest export destination in Asia, averaging over one billion dollar a year over the past four years and now touching 2 billion dollar mark.

7. And as Bangladesh makes an important economic graduation to become a developing country in 2026, we look at Bangladesh as an even more valuable economic partner. In order to leverage the economic opportunities that emanate from the transforming economies of both India and Bangladesh, we have decided that we will soon start negotiating a Comprehensive Economic Partnership Agreement (CEPA) through which both countries are able 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 new supply chain linkages. At the same time, we are exploring other innovative ways, such as settlement of bilateral trade in Indian Rupees, that can provide a new boost to our trade partnership.

8. Today we live in an inter-connected world with growing focus on economic integration. Our own South Asian region has long been regarded as among the less connected ones. However, we are beginning to change this connectivity landscape, particularity with Bangladesh. With a contiguous geography and shared history and culture, raising the scope and quality of our connectivity is a common aspiration, as well as a driver of our growing partnership with Bangladesh. These connectivity links are also at the heart of our people-to-people contact which itself is the single biggest focus of our relationship.

9. Bangladesh is our largest development partner in the world, with concessional financing of nearly 10 billion dollars committed by Government of India under Lines of Credit and other programmes. Many of the projects that we are undertaking in Bangladesh have an important “connectivity” dimension to it. We are particularly happy that 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. That shows the speed and intent of our forward movement in delivering our projects.

10. Both India and Bangladesh are trying to ensure that together we work to revive the age-old connectivity routes. For example, of the seven pre-1965 railway linkages, we have restored five and are operating three cross-border passenger trains along them. Additionally, multiple parcel and freight trains carry essential commodities and finished goods across the border. In addition, cross-border buses today operate along five different routes connecting Bangladesh with Tripura, West Bengal, Meghalaya and Assam. We have also restored and resumed train and bus services that were suspended during Covid.

11. Today, almost 40-45% of our bilateral trade and a significant proportion of people-to-people movement are channeled through thirty six functioning Land Customs Stations, four of which have been upgraded to the level of Integrated Check Posts. We are just going to add another Integrated Check Post in that list, with the ICP at Dawki being inaugurated later this week. In addition, another six Land Customs Stations are in the process of being upgraded to modern Integrated Check Posts on the Indian  side.

12. Important steps have been taken in the last few years for improving the cross-border trade and immigration infrastructure that would facilitate easier flow of goods and people, despite the challenges posed by Covid-19 pandemic. New infrastructure such as the Maitree Setu connecting Sabroom in Tripura and Ramgarh in Bangladesh and laying of Railway siding at Benapole are strengthening our connectivity links. So will the Ashuganj-Akhaura and the Ramgarh-Baraierhat road projects which are under implementation.

13. We realize the importance of railways in revolutionizing transport logistics and raise the scale, efficiency and returns of our economic engagement. During the pandemic, we saw how transformational the impact of railway was in transporting essential commodities via parcel and freight rakes, as well as essential medical supplies such as Liquid Medical Oxygen (LMO) to save precious lives. We are therefore taking up several projects for augmenting railway infrastructure, including those providing cross-border linkages.

13A. These include rail line project linking Khulna and Mongla Port; Bogura and Sirajgonj; Khulna and Darsana; Parbatipur and Kaunia; and Dhaka with Tongi and Joydebpur. In fact, the stretch of Tongi-Joydebpur railway line was inaugurated in February this year by Hon’ble Prime Minister Sheikh Hasina. Another important railway project under implementation is the Akhaura-Agartala rail link project, which would help increase multimodal connectivity through the Akhaura Integrated Check Post. Some other important cross-border linkages that we have committed include the Tongi-Akhaura rail line project, Kaunia-Lalmonirhat-Mogalghat-New Gitaldaha rail link, Benapole-Jashore rail line, Hili-Birampur rail line, and Burimari-Changrabandha rail line.

14. Improvement of infrastructure at Land Customs Station and Integrated Check Posts is another key priority for increasing economic activity in a mutually beneficial manner. Given the importance of Petrapole-Benapole land port for movement of people, new Passenger Terminal Buildings are being built with state-of-the-art facilities for better travel experience. We have commenced construction of the 2nd Cargo Terminal Gate at Petrapole-Benapole that will help double the throughput of vehicles per day.

15. However, there is a need to decongest Petrapole–Benapole by improving infrastructure at other land ports, and also by increasing the number of land ports without trade restrictions. Removing trade restrictions would also incentivize more investments in development of other Land Ports, thereby boosting bilateral trade.

16. The future is in multimodal connectivity – road & rail, inland waterways, and also coastal shipping.

17. 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. There is a renewed focus on harnessing this riverine power to greater effect in connecting our people and businesses.

18. The Protocol on Inland Waterways Trade and Transit (PIWTT), operational since 1972, has helped us in using the river systems of India and Bangladesh on 10 Protocol Routes. According to traffic statistics, the quantity of goods transported via these protocol routes has gone up by 29 times since 2001-02. Nearly 99% of the cargo on the protocol routes is carried by Bangladesh vessels, with a clear economic benefit for the shipping industry. Nearly all cargo has been for bilateral trade. On many of these routes, India and Bangladesh are sharing the cost of dredging which will ensure their year round navigability. The PIWTT also allows for transshipment of goods to India’s Northeastern routes through the Ashuganj River Port in Bangladesh. India is also investing in establishing an Inland Container Port at Ashuganj, and in widening the existing road between Akhaura Land Port and Ashuganj to four lanes. These together with Akhaura-Agartala rail link project will be an important cross-border link. All these efforts and investments are towards facilitating multimodal connectivity.

19. To optimize the potential for better connectivity, we hope to get 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. While we are looking to improve connectivity of our Northeastern States through Bangladesh, we are also encouraging transit facilities for Bangladesh to export its products to third countries through specified Land Customs Stations, Airports and Seaports in India. A recent initiative in this regard is the addition of Kolkata and Delhi airports as transshipment hubs for export cargo from Bangladesh to other countries. This will give Bangladeshi businesses more options for export to third countries. Another example of how connectivity and access stands to benefit Bangladesh is the new SOP we are working on under which railway containers bringing goods from India can be back-filled or back-loaded with Bangladeshi exports when returning to India. 

20. We have also agreed to expeditiously explore direct shipping links between the two countries through a bilateral Coastal Shipping Agreement. We are keen to work towards the expansion of this Agreement to include third-country EXIM cargo, which will immensely help Bangladesh’s global exports and make them more cost-effective. India and Bangladesh are also partnering to develop infrastructure of three major Ports in Bangladesh.

21. We have concluded a bilateral Agreement on the use of Chattogram and Mongla Ports whereby goods can be transported to India’s Northeastern region from the rest of India and return through the two Bangladeshi Ports. While for us, this will reduce time and cost of transportation to our Northeastern States; for Bangladesh, this arrangement will generate revenue and create significant economic gains for the logistics and service industry such as insurance, transport and finance etc. which will facilitate the transshipment. After four trial runs last year, the standing order has just been issued by the National Board of Revenue of Bangladesh, which now formalizes regular movement of goods under this Agreement. I would urge our businesses on both sides to make best use of this new mechanism. Given the geographical proximity with the Northeastern States of India, Bangladesh is in the best position to tap into the abundant economic potential of the Northeast.

22. Besides focusing on large projects of economic linkages, we are also paying emphasis on connecting local economies in our remote border which remain disconnected from the economic mainstream due to geographical constraints. We are doing it by setting set up Border Haats to help local communities on both sides to take advantage of their local economic complementarities. A total of seven border haats have been set up in areas bordering Meghalaya and Tripura. There is demand for more.

23. Connectivity is not limited to just road, rail, inland waterways, and coastal shipping. It also includes energy and digital connectivity.

24. An important example is the India-Bangladesh Friendship Pipeline, a fully funded Government of India project, which was inaugurated by our two Prime Ministers in March this year and is now operational with a capacity to transport one million Metric Tonnes Per Annum of High-Speed Diesel to Bangladesh from a refinery in Assam in a sustainable, reliable and cost effective way with minimal carbon footprint. The first such cross-border pipeline between India and Bangladesh, 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, this Friendship Pipeline is an example of how the cooperation between our two countries is contributing to augment Bangladesh’s energy security. India is also engaged with Bangladesh in its Rooppur Nuclear Power Project, providing technical consultancy and building power evacuation systems.

25. Another important project that has the potential to revolutionize intra-regional electricity trade is the proposal for 765 kV cross-border electricity interconnection between Katihar (India) – Parbatipur (Bangladesh) – Boranagar (India). The project can be a starting point to develop a synchronous and robust grid interconnection in the sub-region and 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.

26. Digital connectivity is another emerging dimension of our connectivity agenda. The 12 IT/Hi-Tech Parks project we are undertaking is an example of the new focus on digital connectivity. We will also be exchanging 50 startups from both sides in line with our bilateral commitment to promote digitization, industry and entrepreneurship. Under this initiative, we are hoping for the first group of Bangladeshi startups to visit India shortly, and thereafter a similar group from India can visit Bangladesh for knowledge exchange and experience sharing.

27. A more practical example of digital connectivity that would directly benefit our businesses is our effort to introduce an e-channeling system that would allow real time documentation in order to further increase throughput of vehicles at ICP Petrapole-Benapole. This would reduce the time taken for processing documents and enable a higher throughput of trucks thereby increasing our bilateral trade. In the future, success at this port could be replicated in other land ports as well.

28. We are also keen to achieve better harmonization of standards between our two countries that can facilitate smoother movement of goods and services.

29. So in summing up, I would stress that the geographical proximity between the two fast growing economies of India and Bangladesh is their biggest advantage and should be leveraged for mutual benefit. Better connectivity is indeed central to improving the ease of doing business and the ease of living, both key priorities of our current leaderships. 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. Bangladesh exports to India could increase by up to nearly 300% if connectivity improves, along with trade and transport regulations and infrastructure.

30. Better connectivity is the driving force for prosperity the world over. It develops lasting inter-dependencies 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. That is true for India and Bangladesh too. The fact that both our economies have grown at high rates in the last ten years shows that greater inter-linkages between our economies over the last decade have rewarded and reinforced our growth. We should leverage each other’s strengths and encourage the full play of our comparative advantages as we strive for greater cooperation, greater integration and greater connectivity.

31. Before I conclude, let me reiterate that India and Bangladesh share a unique and special relationship that unlike any other bilateral relations. It is more than a strategic partnership. Our ties are linked by shared history, language, culture and deep mutual empathy. They are based on shared values and interests. But most importantly, they are rooted in our shared sacrifices during the Liberation War of 1971. Our connectivity initiatives are also guided by that same spirit of mutual empathy and interdependence centered around the welfare and well-being of our peoples and our future generations.