Report On Transit

Executive Summary

Bangladesh lies astride the Indian mainland and its North Eastern Region (NER) comprising

seven relatively small Indian states. Prior to the partition of India in 1947, the

trade and commerce of the NER with the rest of India and the outside world used to pass

through the territories of what is now Bangladesh. Rail and river transit across the erstwhile

East Pakistan continued till 1965 when, as a consequence of the Indo-Pak war,

all transit traffic were suspended. Although river transit was restored in 1972, no progress

has been made on the issue of road and rail transit/transshipment. From the Indian point of

view, transit or transshipment across Bangladesh is important because it will greatly boost the

economy of the NER. While Bangladesh could greatly benefit from transit fees and

potentially huge Indian investment in the transportation network, there is doubt in various

corners in Bangladesh regarding the security implications of such a deal. The writer

studied the issue in-depth, identified the pros and the cons and came up with

recommendations that could benefit both countries and pave the way for future cooperation

between the two friendly neighbors.

Introduction

Transit and transshipment issues have raised a lot of controversy inside Bangladesh in recent

years. In Indo-Bangladesh trade talks; 'Transit' refers to the passage across Bangladesh

territory of Indian goods to and from the North-Eastern States of India using

Indian-owned surface transportation, while 'Transshipment' refers to the same

movement using Bangladesh-owned means of transport. In this paper, 'Transshipment'

means either transit or transshipment as agreed by the states. The issue is a matter of

geographic and economic necessity for India, while for Bangladesh it has security, political

and economic dimensions. Bangladesh lies astride the Indian mainland and the North

Eastern Region (NER) comprising the states of Assam, Mizoram, Nagaland,

Manipur, Arunachal, Meghalaya and Tripura, collectively known as the Seven Sisters.

A long and narrow link around the northern tip of Bangladesh, the so-called 'chickens neck'

or

'Siliguri corridor' connects these states to mainland India. Prior to the partition of India in

1947, most of the trade and movement of goods to and from this region took place through

the area that is now Bangladesh. Chittagong Port had served the needs of the NER. River,

road and especially railway communications laid out during the British colonial period amply

reflects this reality. The NER has age-old socio-economic ties with Bangladesh. Its outlets to

the sea were either through Chittagong port or via the rivers of Bangladesh to the port of

Kolkata. Before partition in 1947, the NER was the largest tea-producing region in India and

shipped its output through Chittagong. Mizoram's main outlet to the outside world was down

the Karnaphuly River to Chittagong port. Tripura was linked through the rail, road and river

communications of Bangladesh. East Bengal was traditionally the natural market for the

agricultural produce of the NER and was a source of supply of capital and services.

The rail and river links between India and the NER survived the partition of 1947. The river

routes from Kolkata to the NER via the then East Pakistan earned profits for both Indian and

Pakistani river transport companies. In 1963 for example, 1.74 million tons of goods were

dispatched to Assam via the rivers of East Pakistan. The rail traffic across East Pakistan was

a good source of revenue for the railway. The rail and river traffic were disrupted following

Indo- Pak war in 1965 when Pakistan withdrew transit rights to India. 3. River traffic

was resumed in 1972 following the signing of a protocol between the two countries.

Some waterways are still being used for the movement of goods but the volume has reduced

considerably; in 1985-95, it averaged only about 64,000 tons per year and now stands at

about 10,000 tons yearly. Most river traffic has been lost to roads and railways. The issue of

transit/transshipment needs to be examined against the infrastructure capacity in

Bangladesh including roads, railways, waterways, and sea and river ports. An examination of

transportation infrastructure will focus on available excess capacity and the modes that could

be used most beneficially. This will also help to pinpoint specific areas where improvement

and development will be required. Although this is primarily an economic issue, there are

security concerns such as increased smuggling of Indian goods and increase of Bangladesh's

vulnerability to the insurgencies in North-eastern India.

This paper will examine the transportation infrastructure of Bangladesh to

determine the possibilities of transshipment. The issue is a part of transportation cooperation

between countries of the region. Cooperation in transportation cannot be considered

in isolation; it has to be evaluated in the context of regional or sub-regional

cooperation. This approach has the ramification of wider cooperation, widening the

scope of regional interaction and increasing the number of stakeholders. A multi-lateral

arrangement inherently contains greater safeguards for smaller and weaker countries,

thereby partially allaying fears of domination by the more powerful country.

Political and strategic considerations are equally important and need to be carefully

considered.

What is transit?

The action of passing through a second country to a third one or access to water or land .In

another word Conveyance of people or goods from one place to another, especially on a local

public transportation system.

Difference between the three concepts: Corridor/Transit/Transshipment:

The connotation of transit is to be distinguished from that of a corridor. In the corridor, a

country gives some kind of rights or control on the land to the other country making it a

defector of its territory, while in transit there is no question of rights involved in the land

territory allowed for transit. It provides only transit facilities under certain conditions and can

be withdrawn.

For example, under the Bangladesh-India 1974 Land Boundary Agreement, Bangladesh

wanted a lease in perpetuity an area of India’s territory 178 meters X 85 meters near Tin

Bight to connect enclave Datagram with main land of Bangladesh. Eventually some days ago

Bangladesh got “corridor” from India.

In pre-partition days, Jinnah wanted a corridor from East Pakistan to West Pakistan through

India but India rejected it because Pakistan would have control on the land territory of the

corridor. Russia wants a corridor from its territory Kaliningrad to Russia’s mainland through

Lithuania but it has been rejected because of the same reasons.

In the instant case, India wants to dispatch goods and other materials from western parts of

India to its seven land-locked northeastern states through Bangladesh and no kind of rights

exists on the land territory of Bangladesh. This is transit, an inter-country passage, like

waterway-transit already provided to India since 1972.

Transshipment is distinct from transit. Transshipment refers to the same inter-country passage

using Bangladeshi-owned transportation, whereas in transit Indian –owned surface transport

move through the transit from one end to the other.

In Europe, Germany or Austria sends goods to Italy through Switzerland. Another instance of

transit, Alaska dispatches goods to mainland US through Canada.

The Reasons why transit is an important issue:

BD is located between the western parts of India and its Eastern and North Eastern States,

physically separating the two parts of India.

Because of this geographical separation, transportation between the two parts of India takes

place by long-winding railways and hazardous mountainous roads along the Shiliguri

corridor, causing huge cost to the Indian economy in terms of time and resources.

Shiliguri Corridor (Chicken Neck) is about 17 miles connecting New Jalpaiguri in the West

and Kuchbihar in the East.

What we need to know about Transit:

The existing road infrastructure in Bangladesh and whether it will permit transit

facility

The cost of road development and maintenance

The required security measures and their costs

Convenient points/routes through which transit will be allowed

The items of cargo that can be legally moved

What type of fees can be charged for transit?

What methods/procedures are followed by other countries in matters of transit

Possibilities of using alternative modes, such as rail or IWT, or a combination of road

and rail, or rail and IWT, or all three transport modes?

History of transit between Bangladesh and India

The transit was used by India till 1965 war, since then it got stopped. The war was between

India and Pakistan. In the mean time, Pakistan broke, Bangladesh was born, but situation

remained unchanged. Though after independence, Bangladesh allowed India the transit in air-

routes and river, the major issue of road-transit is still not tackled. The river-transit is almost

abandoned for being uncompetitive; the mutual air-transit is still in use.

Transit through waterways: British period (since 1847)- Water transport directly carried

goods from Assam to West Bengal.

Pakistan period (mid-1950s to 1965): Three Routes (under Protocol on Inland Water Transit

and Trade) Dhubri (Assam)-Chilmari-Goalondo-Chandpur-Narayangonj-Bhairab Bazar-

Chhatak or Zakiganj Border of India (Assam). Dhubri-Chilmari-Chandpur-Barisal-Mollarhat-

Khulna-Bihari Canal (India) Godagari (Rajshahi)-Goalondo. From there one sub-route is to

Dhubri, and another sub-route is via Chandpur to Chhatak or Zakiganj Border of Assam.

The old Protocal was revived on 28 March 1972, which allowed transit transportation on 4

routes (two way traffic): Calcutta-Haldia-Raimongal-Chalna-Khulna-Barisal-Nandibazar-

Chandpur-Aricha-Sirajganj-Bahadurabad-Chilmari-Dhubri. Calcutta-Haldia-Raimongal-

Mongla-Kaukhali_Barisal-Nandibazar-Chandpur-Narayanganj-Bhairab Bazar-Ajmiriganj-

Markuli-Sherpur-Fenchuganj-Zakiganj-Karimganj.Godagori (Rajshahi)-Dhulian Karimganj-

Zakiganj-Fenchuganj-Sherpur-Markuli-Ajmiriganj-Bhairab Bazar-Chandpur-Aricha-

Sirajgonj-Bahadurabad-Chilmari-Dhubri.

Transit declined to a trickle because of lack of round-the-year navigation as well as absence

of night navigation. Benefit accrued to BD in revenue was small.

Transit by Rail: Rail link between Chittagong and Assam as well as between Calcutta Port

and Assam via East Bengal was discontinued as a result of the partition of India in 1947.

What is this transit issue altogether?

The transit for a country is mainly access through a country to the third one. For example,

India has a transit to Afghanistan through Iran. So, Indian goods can board from Iranian ports

and go through to Afghanistan. However, due to geographical complexity, in this case, the

transit refers to connectivity between North-East Indian seven states with mainland India,

especially West Bengal. The goods carried from North East, comes to mainland India through

a strip of Assam and North Bengal, taking a route miles longer than what could have been a

shortest through Bangladesh. Bangladesh govt. never allowed India to have a transit in return

of a hefty transit fee offered by India. The transit, that could have been a win-win situation,

has been refused as a threat to National security. The other point of interest here could be the

transshipment. Here, Transit refers to the passage across Bangladesh territory of Indian goods

to and from the north Eastern states of India using Indian owned surface transport, while

transshipment refers to the same movement using Bangladesh-owned transport

Is transit an economic issue?

Some argue transit is an economic issue. It facilitates trade and therefore it may be perceived

as such. I would argue that this is conceivable but for most of the cases political relations

define economic relations. In other words, political relations cannot be separated from

economic relations. History is replete with examples of friendly political relations providing

the climate and the incentive for forging closer economic relations.

It has been seen that in most case progression has been from close political relations to the

deepening of economic relations. For example, why does Bangladesh not have economic

relations with Israel? It is because there is no political relationship with that country.

Political relationships that are not characterized by mistrust or suspicion allow first steps in

economic relationship which would then expand and generate vigorous inter-state economic

activities.

In that context, for creating an appropriate political climate, India has to come up with fair

and just proposals to resolve some of the bilateral issues that affect Bangladesh people with

“bread and butter issues”. The issues of top priority are (a) maritime boundary, (b) land

boundary including the exchange of enclaves, (c) reduction of huge trade deficit and (d)

equitable sharing and management of water of trans-boundary Rivers.

They are long-standing disputes and Bangladesh cannot force India to resolve these issues

either bilaterally or through third parties intervention including mediation, arbitration or

adjudication.

India has to take initiative in building confidence measures pursuing the “Gujral doctrine”

with its small neighbors to manifest its good will.

Transit – How India gains out of it

The main gainer of this whole process would be the people of North-East of India. Right

now, anything produced in that region cannot be marketed in the rest of India, due to the

distance from port (Kolkata). From past decade, India is becoming more dependent on

foreign and private investments in growth picture. But, no company will want to invest in this

remote corner of the Northeast, because of the logistical problems of Sevens Sisters linking in

with the rest of India. So the only real economic future of Northeast lies in reopening its route

through Bangladesh to its West and with Myanmar and South-East Asia to the East. For

additional benefit, if they are allowed to use a Bangladesh port, the export oriented business

can also come up in this region. The region is rich in energy resources, like natural gas and

hydro-electricity. The economic progress in this region can stop a long-standing grievance

and insurgency resulted. The demand of India for transit through Bangladesh are the

followings presumably, a major portion of goods, not all, currently transported from Western

parts of India through Shiliguri by road and rail will be transited through BD.

At present about 4 million MT of goods are transported by rail, and about 10 million MT of

goods are transported by road through Shiliguri. Assam-bound Cargo originating from Uttar

Pradesh, Rajasthan, Delhi, Punjab, Haryana and other northern states of India will be costly

to transit through BD. Hence only a portion of this traffic may be diverted through BD.

Mostly, road transport is used for moving goods from Shiliguri through Assam to other sister

states- Arunachal Pradesh, Manipur, Nagaland, Meghalaya, Tripura and Mizoram- because

these states, other than Tripura (45 km) and Arunachal Pradesh (25 km) have no rail network.

Goods originating in West Bengal, Orissa, Bihar, and Maharashtra, Madras and other

southern states of India destined to the Eastern and N.E. Indian states may be more

economical to transit through BD. From Shiliguri, rail transport carries goods to different

parts of Assam.The rail-transported goods may not be transited through BD.

THE NEED

Indian Predicament

The NER shares about 1500 km of borders with Bangladesh; only 1% of its border is with the

rest of India via the Siliguri corridor. These states occupy 8% of India's geographical area and

contain 4% of the total population’s The economy of the NER states is stagnant and its share

of national GDP has declined in the last 25 years’ The regional economies are simple, heavily

deficit, and dependent on the rest of the country for basic needs. All seven states are Special

Category States; the Central government almost entirely funds their development plans with

90% grant and 10% loan There is no agricultural surplus and limited capital

formation and entrepreneurial skills in the NER.8 However, the region is endowed with bio-

diversity, hydro-potential, oil and gas, coal, limestone and forest wealth. It is ideally suited

for a whole range of plantation crops, spices, fruits, vegetables, flowers and herbs much of

which could be processed and exported.Presently the cost of transportation alone prevents

goods produced in NER from competing in the rest of India. The cost of transporting a 15-ton

truckload from Agartala to Kolkata is Indian

Rs. 50,000 to 60,000 (the distance is 1800 km). If this truck were to pass through Bangladesh,

the cost would be dramatically reduced (distance is about 450 km), thereby reducing the cost

of every ton of goods by Indian Rs. 2000. If transshipment were done by trains, same goods

would cost even less. Every year about 10.7 million tons of goods are transported into NER

from the rest of India. Another about 2.3 million tons are dispatched from NER to other

regions. It could be reasonably assumed that the NER will be interested to transship at

least one-third of their goods through Bangladesh i.e., about 4 million tons. This

low figure is quoted because the western part of Assam may find it economical to use

existing transport facilities due to transport subsidies provided by the government. This

figure will rise rapidly as NER producers attain competitive advantage in marketing

their products to the rest of India. Indian exporters, especially tea exporters

from eastern Assam would prefer to export their products through Chittagong.

Indian Railways has lost much of the tea traffic to road transportation because of its failure to

reduce transit times and maintain time sensitive delivery schedules’ The NER is called the

'periphery of the periphery'. Various insurgencies have been going on in the seven states of

the NER for much of the last fifty years. Bangladesh's Requirement There is a massive

imbalance of trade between India and Bangladesh in favor of the former in the order of

20:1.10 In addition; there exists a similar imbalance in the 'unofficial trade' which passes

through the porous borders. The value of this unofficial import to Bangladesh is estimated to

equal the official one that now stands at about US $ 1.2 billion. Thus the total import from

India, official and unofficial, is over US $ 2 billion annually, and Bangladesh probably

exports less than US $ 120 million to India through both channels. The trade imbalance can

be partly redressed by allowing more duty-free access of Bangladesh goods to India.

Although the Indian side has repeatedly promised increase of access, in practice little

progress has been made. The Indian Government had even tried to link the provision of

transshipment to the granting of duty-free access of 25 categories of Bangladesh export items

to India.11 Non-tariff barriers are used to block entry of Bangladesh goods into India

when duty-free access is provided. On the other hand, the liberal import policy of

Bangladesh has resulted in a flood of Indian goods. Bangladesh is on the receiving end of all

the disputes with India. In the absence of advantage, Delhi pays attention to Bangladesh's

concerns and problems only when a problem threatens to reach major proportions.

Transshipment is the only advantage Bangladesh has to wrest concessions from

India. This should be used, if possible, to obtain a total duty-free access of all Bangladeshi

goods to the Indian market. Bangladesh can claim this right as an LOC under

WTO provisions.12 given this facility; Bangladesh may be able to double its exports to India,

although even then the difference will remain substantial. Transshipment could generate

substantial revenues and this would further reduce the trade imbalance.

Reducing distance

A part of India on the North East is separated from the rest of India by Bangladesh, except for

a very narrow transport corridor, known as the 'chicken neck'. Bangladesh does not allow

India transit access for trade to the North Eastern states. These seven North-eastern states of

India also do not have access to sea except through Kolkata that requires passage through the

round-about chicken neck. For example, the distance between Agartala (India) and Kolkata is

over 1600 kilometers. In comparison, the distance between Agartala and the nearest seaport

in Bangladesh (Chittagong) is less than 100 kilometers. Understandably, transport costs of

trade for these North Eastern states are very high. Furthermore, two landlocked countries,

Nepal and Bhutan, have not had transit facilities through India to access Bangladesh ports of

Mongla and Chittagong.

Fortunately, this limiting restriction on trade movements is about to change. India and

Bangladesh are in the process of negotiating a transit agreement to allow traffic between

western Bengal and the landlocked Indian states in the North East through Bangladesh. It is

expected that this framework will also help Nepal and Bhutan trade internationally through

Bangladeshi sea ports.

Is transit consistent with sealing off the Indo-Bangladesh border?

Another prickly issue is fencing by India with barbwire barrier of the Bangladesh-India

border,

Does fencing off Bangladesh make India a good neighbour?

India as of June 2007 has been quietly sealing itself off Bangladesh, totaling 2,500 kilometres

in the past seven years. The fencing project will eventually reach across 3,300 kilometres, or

2050 miles, hundreds of rivers, and long stretches of forests and fields.

Of the total 3,300 kilometres fencing, 577 kilometres are in the Assam-Meghalaya border.

Work of 91 kilometres has been complete and work has been in progress for 129 kilometres

and gradually India will seal off this 577-kilometres Bangladesh border in this sector.

In the US, its decision to fence 1,100 kilometres of the Mexican border triggered months of

political debate ranging across immigration policy to the environmental impact. When Israel

announced it would build a 680-kilometre barrier around the West Bank, an international

outcry erupted and the International Court of Justice declared illegal some of the barrier

because it was inhuman. But there has been barely a ripple over India’s far larger project

began in earnest in

2000.

Bangladesh Parliament must now discuss and debate how and in what way does the fencing

have impact on environment and the people who live in border area?

While India has been silently sealing off its border from Bangladesh, it wants land transit

through Bangladesh. Does it not occur to India that such request is contrary to the spirit

behind the fencing India-Bangladesh border? Does fencing manifest its goodwill towards

Bangladesh?

Implications of transit facility:

To my knowledge, no detailed study has been undertaken on the possible benefits and non-

benefits to Bangladesh. The study may include the infrastructure, viability, cost-benefit

analysis, risk analysis and management and security that involve health hazards and

environmental impact on hundreds of vehicles moving through Bangladesh.

Furthermore, the study for a regional multi-modal transport system will be useful so that

Bangladesh can also get transit facility to Nepal and Bhutan or vice versa. Bangladesh has

already provided transit facility to Nepal to use Bangladesh ports but Nepal cannot use it

because

India is reportedly reluctant to provide Nepal transiting through Bangladesh.

India’s Prime Minister Dr. Singh in a speech on 3rd April 2007 at the SAARC New Delhi

Summit spoke of “full regional connectivity” The regional connectivity could be a

springboard

for exploiting the vast physical resources of the eastern hub of India, Bangladesh, Nepal and

Bhutan.

What Types of Commodities are Likely to be Transited?

Verification of demand in the NE Indian states for goods of Western Indian origin and vice

versa, and a physical check at the corridor indicates the following:

To Eastern and NE India- rice, atta and moida, motor vehicles including motor parts, chassis,

LPG, diesel engine, pipe and pipe fittings, glass wares, electrical goods and appliances, G.

C.sheets, pump sets, plastic goods, machinery and parts, chemicals, powdered milk,

medicine, biscuits, cosmetics, cycles, cycle tyre and tubes, autorickshaw, marbles and tiles,

two wheelers, cement, crockery, vanaspati, agarbatti, acrylic yarn, pesticide, agricultural

implements, T.V., refrigerator, air-conditioners, clock, paints, battery, soft drink, newsprint,

mustard oil, sanitary works etc. From Eastern and NE states- mainly coal and coke, vinegar,

plywood, LPG, bamboo and papers. Of the total flow of goods between them, inflows to

Eastern and NE states from the rest of India are 60 percent, which means that the reverse flow

constitutes the remaining 40 percent.

Possible Entry and Exit Points in Bangladesh along land Routes for Transit of Indian

Goods.

Western Side Eastern Side

i. Banapole – Petrapole Boder Tamabil – Meghalaya Border

ii. Rohanpur – Sindbad Border Akhaura – Agartala Border

iii. Hilli – Balurghat Border Chittagong – Belonia

Border

iv. Banglabandh – Phulbari Border

Possible Transit Routes

Routes Distance

(Km)Remarks

Benapole – Tamabil

Benapole – Akhaura

686

437

Via Dhaka. May serve all states except Tripura

and Mizoram

Useful for Tripura, Mizoram, Manipur, Nagaland.

Hili – Tamabil

Hili – Akhaura

650

404

Can serve all Eastern and NE states equally well.

-do-

Banglabandh – Tamabil

Banglabandh – Akhaura

876

627

Longest distance between Western and Eastern

border

Rohanpur – Tamabil

Rohanpur – Akhaura

763

416

May serve all Eastern & NE states well.

-do-

Cost of Transit through Bangladesh

• Because of different origins and destinations of cargo moving through Shiliguri, the

transport cost is difficult to assess.

• Information supplied by the Federation of Industries of North Eastern Region

(FINER) a decade ago shows that transport cost in medium trucks (15.6 tons) per ton-

km from Calcutta to NE states was Re 0.25 by water, Re 0.85 by rail, and Rs. 1.57 by

road (in BDT, 0.30, 1.02, 1.88, respectively).

• Transport cost per ton- km along the possible land routes through Bangladesh was Tk.

1.19, which is 37% lower than the cost of transport through Shiliguri.

• These costs include only trucking cost (freight, toll, fees and ancillary charges), not

other costs such as insurance, loading and unloading, cost of fuels, lubricants, spare

parts, and repairs).

Comparison of Cost of Transiting through BD and Transporting through Shiliguri

• India will save 37% of the costs if the goods are transited through BD.

• There is also a significant saving in time.

• A previous slide shows that the length of convenient routes varies from roughly 400

km to 690 km. within Bangladesh. From the exit points in the Eastern border of BD,

the destinations are not very far.

• Assam, Meghalaya, Mizoram and Tripura have common borders with BD. Other

states- Monipur and Nagaland – with the exception of Arunachal Pradesh are in the

proximity of 100 km.

• On the other hand, goods flowing through Shiliguri will have to traverse more than

500 km after Shiliguri Corridor.

• Thus India will gain in terms of transport cost as well as an enormous reduction in

time needed to reach the intended destinations.

Present Volume of Cargo Traffic in Bangladesh Routes

• The estimation of the number of vehicles and the volume of goods moving along the 8

possible routes in BD is difficult.

• Goods from Benapole, Hili, Rohanpur and Banglabadh come to Dhaka first and then

move to other destinations.

• Similarly goods from Chittagong, Sylhet and other Eastern Districts come to Dhaka

and subsequently move to other destinations.

Movement of trucks from border to border is relatively very small.

Road Maintenance after Transit

• RHD sources say that the possible routes of transit of Indian goods are highly

underutilized. The condition of roads is good and they may bear significantly higher

load and may also accommodate 2-3 fold trucks without any inconvenience or

damages to existing roads. Currently, on average, about 750 trucks ply on these roads

every day.

• A transit arrangement will not require any immediate changes in the road

infrastructure. No new road will need to be built.

• The most important requirement will be for adequate maintenance and rehabilitation

of the relevant roads.

• With subsequent increases in transit traffic, the maintenance and rehabilitation works

will need to be increased. Costs will also rise accordingly.

Transport infrastructure in Bangladesh

Railways

At the time of the partition of India in 1947, erstwhile East Pakistan inherited the portion of

Bengal and Assam Railway that fell within its borders. The track length of the

railway then known as Pakistan Eastern Railway was about 2,604 km long.17

This became Bangladesh Railway (BR) in 1971. BR is divided into East and West zones

separated by the river Jamuna. East Zone has 1,279 km of Metre- Gauge (MG) track, and

West Zone has 553 km of MG and 936 km of Broad-Gauge (BG) track.18 The dual gauge

system is complicated, time-consuming and inefficient. The two zones are connected by river

ferries that take about 36-48 hours to ferry a goods train across the Jamuna. A railway line is

fast nearing completion that would connect the two railway zones with a BG-MG dual

track line across the Jamuna Multipurpose Bridge (JMB) eliminating the ferry crossing.19

BR is connected to the Indian railway system in the west at Benapole (Jessore), Darshana

(Kushtia), Rohanpur (Chapai Nawabganj), Radhikapur (Dinajpur) and Chilahati

(Nilphamari). In the east, it can be easily restored at Shahbajpur (Sylhet) and a link to

Agartala can be laid down at Akhaura at reasonable expense. Railway based

transshipment can soon be done through Kolkata-Darshana-Ishurdi- JMB-Bhairab

Bazar - Akhaura - Kulaura - Shahbazpur – Karimganj (India) route. This main route can use a

number of alternative link variations mentioned below.

The Kolkata - Benapole - Jessore - Darshana route can be a variation. The

Radhikapur -Parbatipur - Ishurdi route can also be used. The Rohanpur – Rajshahi -Ishurdi -

Santahar route may be used for goods originating in Malda (India).

The traffic density over the proposed transshipment route is generally quite low (Table 1).

The highest is between Akhaura-Bhairab Bazar, which is 39.21 trains per day of

passenger and freight trains. This segment is only about 32 km in length and has double line

compared to rest of the route which is single line. The rest of the route in the East Zone

amounts to less than 24 trains per day. In the West Zone, along the proposed transshipment

route, the average is less than 20 trains per day. The amount of freight carried and the number

of wagons and coaches, which ply per day, is paltry. In 1969-70, this railway system clocked

144-million wagon km in the MG section, whereas in 1999-00, this dropped to little over 61

million.21 In 1969-70, BR carried 4.88 million tons of freight and this dropped to 2.89

million tons in 1999-00. The actual amount of freight moved has remained static in the last

thirty years in the East Zone. In the West Zone, it has reduced dramatically during the same

period. Container traffic between Dhaka and Chittagong has doubled in the 1995-00

period whereas other freight traffic has reduced considerably as road based

movement has proved more reliable and competitive.

Once the railway link over the JMB comes into operation, train travel time between Kolkata

and

Assam via JMB will reduce by about 36-48 hours. The traffic density between

Tongi and Bhairab Bazar is 37.32, which is high by BR standards. In the short term, this

segment will be able to absorb some additional traffic. In the medium term, however, Tongi-

Bhairab Bazar route has to be upgraded to double line, even to accommodate traffic growth

on the Dhaka-Chittagong route. Meanwhile, some transshipment traffic can be

diverted through the Joydebpur -Mymensingh - Bhairab Bazar route, which has a traffic

density of only 26 and can easily absorb fifty percent traffic growth. However, this diversion

will increase travel times by about six hours.

The difference of railway gauges in the East and West Zone continues to be a serious

bottleneck.

Conversion of the entire network to BG will require a huge investment. BR is a losing

concern; therefore, World Bank and other international financial institutions are not eager to

invest in this sector. On the other hand, if Bangladesh desires to be part of the

Trans-Asian Rail (TAR) network, it would entail the total conversion into BG. Paucity of

land and population pressure will limit the amount of land available for highway

development. Railways and IWT are much more environmentally friendly, cheaper and cost

effective than road-based movement. Therefore, it is logical that Bangladesh should develop

its railways and waterways for freight and passenger traffic. Better management of BR,

including greater privatization of services and outsourcing of maintenance, management and

security has the potential to improve financial performance.

At present, it takes BR between 24-48 hours to shift freight from one gauge to the other using

manual methods. If container traffic is used for transshipment and mechanical equipment is

used for inter-gauge transfer this time can be reduced to six hours. Once the

JMB rail link is commissioned, mechanical equipment can be installed at both Ishurdi and

Joydebpur to enable inter-gauge transfer of containers. Private operators can be contracted to

install and operate these services obviating the need for BR's own investment. Data given in

Table 2 shows that in the present system it will take 6-8 days for a freight train to travel from

Kolkata to Karimgonj in Assam. This can be reduced Transit and Transshipment :

Implications for Bangladesh by a third or even halved when the JMB rail link is

commissioned and if containerised cargo is used with mechanical handling equipment at

inter-gauge transfer points. Once the JMB railway link is commissioned, it may be possible to

employ about ten freight trains for transshipment traffic every day raising the daily tonnage to

about 8000 to 10,000 tons of containerized cargo. In the case of non-containerised cargo, the

figure would be somewhat less. Thus, the annual capacity would be about 3.5 million tons

without a substantial expansion of railway tracks and infrastructure.

Roads and Highway System

Bangladesh has over 27,000 km of paved roads, of which there are 3,096 km

are national highways and another 1,744 km are regional highways.23 The rest are feeder

roads not suitable for heavy or sustained traffic. The highway routes, which may be

considered for transshipment,

are given below:24

a. Route 1: Benapole - Jessore - Mawa - Sylhet - Tamabil/Karimgonj or

Brahmanbaria -Akhaura/Kasba.

b. Route 2: Benapole - Jessore - Aricha - Sylhet - Tamabil/Karimgonj.

c. Route 3: Benapole - Paksey - JMB - Sylhet - Tamabil/Karimgonj or JMB -

Brahmanbaria -Akhaura/Kasba.

d. Route 4: Rohanpur - Rajshahi - JMB - Sylhet - Tamabil/Karimgonj or

JMB -Brahmanbaria - Akhaura/Kasba.

e. Route 5: Hilli - Bogra - JMB - Sylhet - Tamabil/Karimgonj or JMB

f. Route 6: Banglabandha- Bogra - JMB - Sylhet - Tamabil/Karimgonj or JMB -

Brahmanbaria -Akhaura/Kasba.

Routes 1, 2 and 3 will be favored as possible transshipment routes. Vehicles using these

routes will have to negotiate the river ferry at Mawa, Aricha and Paksey respectively. The

Mawa-Dhaka segment of Route 1 is a regional highway class road and traffic is already quite

heavy i.e., over 5000 vehicles per day. Route 2 also has to negotiate the river ferry at Aricha

and the quality of road between Faridpur and Rajbari is of regional highway class.

Traffic density between Aricha - Dhaka - Narshingdi is very high. Route 3 has to

use the river ferry over Padma at Paksey. The road from Paksey to Pabna is not suitable for

heavy traffic. The Dhaka segment of the route already suffers from severe traffic congestion.

Routes 4 and 5 are goods transported and moderate traffic until JMB. However, these routes

are far from the major commercial centers in West Bengal. Route 6 is suitable for traffic

emanating from Nepal and to a lesser extent, Bhutan.

The river ferries at Mawa, Aricha and Paksey are major bottlenecks at present. The

construction of the bridge at Paksey is progressing well, but all highway routes have to pass

through the greater Dhaka area, which already suffers from very heavy traffic congestion, and

the system is unable to cope with the projected growth in domestic traffic. A Dhaka bypass

highway system and bridges at Mawa and Paksey will be needed before considering road-

based transshipment.

With the opening of the bridge over Meghna at Bhairab and upgrading of the Dhaka – Sylhet

highway, Routes 3, 4 and 5 may be possible transshipment routes. Road based freight

movement has the advantage of flexibility, but the national highway system does

not have the excess capacity to absorb additional regional/ international traffic. Creation

of such capacity will require massive investment and given the paucity of land, effect on

environment and projected growth of domestic traffic, may not be possible at all.

Indian roads are built to higher axle load specification (10.2 tons) than those in

Bangladesh (8.2 tons)25 and therefore Indian trucks are designed to carry heavier loads than

the load-bearing capacity of our roads. Therefore, sustained Indian truck traffic on

Bangladesh highways is likely to cause damage in the order of 3.83 times than the normal

wear and tear at standard axle-load.26 Major and sustained investment in the roads and

highways system by India will have to be negotiated while negotiating transshipment

proposals.

Chittagong Port

Chittagong Port is attractively sited as a port of entry for transshipment to NER using rail or

road extension. Chittagong Port is presently considered very inefficient and one of the most

expensive ports in the world. It takes an average of 7-10 days to clear a ship. The highest

traffic density along the Chittagong –Akhaura route is presently 37 trains per day

with the Akhaura -Shahbazpur segment having a density of 24. Therefore, the railway

link may be able to take some additional traffic but this will always be subject to traffic

growth on the Chittagong-Dhaka route. The Chittagong-Sylhet highway has extremely heavy

traffic up to Comilla but there after the density is low. The Comilla-Sylhet highway

needs up-grading from regional to national highway category. Therefore, in the

present state of infrastructure, road transshipment from Chittagong to Assam has a

very limited capacity.

Inland Water Transport (IWT) has historically been the most important mode of transport for

the country. In Bangladesh, 30% of all cargo and 15% of passenger traffic (1989)27 are

transported by inland waterways.

Waterways are the cheapest mode of transportation for both cargo and passengers. IWT is not

only used for intra-country movement but a significant amount of import-export traffic is also

routed through it. According to the Inland Water Transport Authority (IWTA), the total

length of navigable waterways is about 6000 km of which about 1700 km are navigable

throughout the year, and the rest are available only during the rainy season (3-6 months).28

Possible waterwaysfor river transshipment round the year are:

a. Chittagong - Chandpur - Baghabari/Nagarbari - Chilmari - to Assam.

b. Chittagong - Chandpur - Bhairab Bazar/Ashuganj - by road to Assam /Tripura.

c. Kolkata - Barisal - Chandpur -Bhairab Bazar/Ashuganj - by road to Assam /Tripura.

d. Kolkata - Barisal - Baghabari/Nagarbari - Chilmari - to Assam.

Different Modes for Transshipment Traffic

The advantages of using all the available modes of transportation for transshipment traffic are

obvious. However, we have seen that in Bangladesh 53% of all goods are moved by roads.29

The road system is already overburdened, is yet to be linked by bridges at Paksey and Mawa

and, above all else, the entire road-based transshipment traffic will have to pass through the

Dhaka area which cannot even accommodate existing traffic. Road transshipment can only be

considered once the bridges at Paksey and Mawa are commissioned, the Dhaka By-pass is

completed and the inter-linking highways are upgraded to at least dual carriageway. At

present, BR carries only

17% of all freight transported in Bangladesh.30 It has sufficient excess capacity and its

facilities are underutilized. BR should be used to carry the bulk of the transshipment traffic.

Indian rolling stock can be used or hauled by BR locomotives to overcome shortage of rolling

stock. It is felt that BR can be made profitable merely by carrying transshipment traffic both

directly from West Bengal to NER and through Chittagong port to NER and vice-versa.

Chittagong port facilities can be used for transshipment traffic. It can also handle exports

from and imports to the NER.

However, the capacity of Chittagong port and its efficiency need to be radically improved.

The concept of a private port must be implemented if Chittagong is to realize

its ambition of becoming the hub-port of the sub-region. Studies have shown that even if

all the current plans of port capacity expansion are implemented the expected growth

of traffic is likely to outstrip supply by 2010. Hence, there is no reason to fear28 that

Chittagong port will lose business to the private port, especially if it totally fails to improve

productivity.

IWT has the potential to carry transshipment traffic. Night navigability has to be improved.

The river ports of Bhairab Bazar/Ashuganj and Chandpur may be developed to

berth ships and efficiently handle cargo between ship/barge to rail or road transport and

vice versa. Cargo can be moved from Bhairab Bazar/Ashuganj or Chandpur to NER by rail or

road transport. This mode of transshipment has tremendous potential and will also

invigorate river ports and attract investment to IWT development. Various estimates

have been offered about the revenue Bangladesh may be able to earn from transshipment.

Figures range between Tk 600 800 crore.31 From the Bangladesh point of view, the railways,

which have been operating at a loss, can be turned into a profit making commercial

enterprise. Investment can then be attracted to improve the railway and IWT

infrastructure, which is likely to have beneficial knock-on effects for the entire economy.

Political and security considerations

Territorial Integrity and Sovereignty

An article published in the Daily Star on 12 August 1999, made the point that use of

Bangladesh territory for the transshipment of Indian goods is "tantamount to granting a

corridor to India".

Because, in the writer's view "Indian goods will have unhindered passage along a demarcated

route, also used by Bangladeshi traffic and that Bangladesh government would have no right

to touch or inspect the cargo enroute for illegal, contraband and undesirable goods."32 The

writer also went on to say that once the transshipment agreement is concluded Bangladesh

will not be able to annul it. He asserted that "the very fact that India will be able to transport

any and all the items or commodities of her choice places the people of Bangladesh in a

highly dangerous and

vulnerable position because, the items may and will include not only illegal and

contraband goods but also arms, equipment and various types of supplies that could be used

for direct or indirect military purposes."33 He suggested that even if regulations are

formulated to prohibit the shipment of military goods and supplies, Bangladesh will not be

able to enforce this, because of lack of efficiency and corruption of customs officials. The

same author also says that India enjoys 'highly beneficial' advantages from inland waterway

transit through Bangladesh without reciprocal advantage to Bangladesh. In fact, at present

only about

10,000 tons of transit cargo per year, pass through Bangladesh waterways and

the Indian government pays Tk 2 crore annually for this facility.

The Daily Star of 24 August 1999 published an opinion on the same issue stating that transit,

transshipment and corridor have the same geopolitical implication in that it

"dilutes the geographical barrier for India to its north-east". It said that international borders

are "sacred, sanctimonious and sacrosanct" and these cannot be opened up for

"experimentation on transshipment or tampered with for any other purpose". It said,

"Sovereignty is the core value of national security for any country and sanctity and the

impregnability of the border is its first and foremost symbol and is never negotiable". It also

mentioned that the geographical location of the NER is the only influence Bangladesh enjoys

with India and questioned 'what will happen when we will be bereft of the only leverage in

our hand.'35 Several other authors have written in the same vein in various papers. It is

obvious that the question of national sovereignty and territorial integrity weighs heavily on

the minds of opinion makers while considering transshipment. On the other hand, many

of the concerns raised can be tackled by properly negotiated agreements,

arrangements for supervision and achieving national consensus through open discussion.

Passage of goods through transshipment can in no way be called 'corridor of movement.'36

Transshipment based on railways, IWT and Chittagong port will automatically address many

of the concerns voiced and also cause less antagonism in public minds due to

relative 'invisibility' of transshipment. Modern tools for inspection can easily ensure that

contraband items are not carried through transshipment.37 Indian authorities have made it

abundantly clear that all transshipment goods will be subject to inspection and

supervision by Bangladesh authorities throughout its passage within Bangladesh

territory.38 Indeed, transshipment is vital for the development of the NER and the Indians

know the cost and benefit of transit in equivocal terms.39 They are not likely to do

anything to jeopardize it by violating any agreement signed for the purpose.

Bangladesh let the "25 Year Treaty of Friendship" with India expire without any attempts at

renewal. There was no Indian effort either. Therefore, any transshipment

agreement will be subject to revision by the contracting parties. Furthermore, transit

through IWT has been going on since 1972 but it has diluted neither our borders nor our

security. Transit using Bangladesh airspace is also in vogue. Commission in Dhaka during an

interview with the author on 12 June 2002. Passage of military equipment through

transshipment without or against the consent of Bangladesh is untenable. First,

this is not necessary for India, unless the Siliguri corridor is severed by a Chinese

invasion of India, a highly unlikely scenario at present. India has alleged many times, albeit

unfairly, that Indian insurgent groups have taken refuge within Bangladesh, but has never

threatened hot pursuit across the border or sought the right to strike at alleged insurgent

camps. Therefore, apprehensions of increased security vulnerabilities due to

transshipment are not supported by facts. It is also unreasonable to think that India will find it

practical to exercise military control of a hostile population of 130 million

people just to maintain a passage through Bangladesh. India also aspires to graduate from

regional power to world power status, therefore, this ambition compels India to act

responsibly in regional and international affairs. Moreover, a study shows that expectation of

benefits from trade restrains states from initiating military conflicts.

Reciprocity and Spirit of Cooperation Over the years friendly relations between India and

Bangladesh has suffered because of several minor irritants. India initially had allowed Nepal

the right of transit into Bangladesh territory, but then imposed so many conditions that

road based transit has not taken place at all, in effect paralyzing implementation of the

agreement. The issue of duty free access of Bangladeshi goods into India has been dealt with

in a manner that prevents Bangladesh from taking any advantage of the 'concessions'

offered. Bangladesh has two choices in the present circumstances: to do nothing or

to tackle the issue of transshipment in a professional manner. In the first option, the trade gap

will continue to spiral increasing the deficit. On the other hand, if Bangladesh can

negotiate an advantageous transshipment agreement, there can be a tremendous gain, not only

in transportation profits but also through increased trade. Bangladesh's advantage will be

increased by giving transshipment to India rather than by withholding it. It will create

stakeholders in India who are supportive of Bangladesh. Bangladesh has very few

advantages. 'Its geo-strategic advantage is perhaps the single most precious natural wealth

for Bangladesh left fully unattended so far.'41 SAARC has become hostage to Indo-Pak

rivalry. President Musharraf stated during his visit to Dhaka in July 2002 that, the future of

SAARC depends on Indo-Pak relations. The future of Bangladesh cannot and should not

be dependent on such unending rivalry between other nations. If SAARC does not meet

the economic interests of Bangladesh, we should divert our energies to regional cooperation

responsive to our needs such as BIMSTEC, or sub-regional cooperation such as SAGQ. Sub-

regional cooperation is in keeping with the SAARC charter. Bangladesh has to learn to stand

on its feet, fend and fight for national interests. Bangladesh should do well to remember Lord

Palmerstone's 18th Century dictum, 'In international relations we have neither permanent

enemies nor perpetual friends, but only permanent interests'. Some writers have suggested

that transshipment of Indian goods might provoke or encourage insurgent activities

inside the country. There are many Indian business houses and interests in Bangladesh. Not

once have these been targeted by Indian insurgents in the past. Although an attack by Indian

insurgents cannot be ruled out, the likelihood seems to be low. In any case, the suggestion

that India will invade Bangladesh to protect transshipment traffic seems improbable and

without precedent. Bangladesh's economic and political decisions can hardly be deflected on

the basis of such far-fetched apprehensions.

Increasing Cooperation The costs for not initiating sub-regional transport and economic

cooperation are high for all the countries in the region. Bangladesh, India, Nepal and Bhutan

stand to gain substantially through sub-regional transshipment and transit. It is clearly

a win-win situation for all. India with its overwhelming population, its large economy,

military power and geographical size must take the lead in assuaging the concerns of its

smaller neighbors. Attempts at regional hegemony have not, and will not, win India any

friends in its neighborhood. Considering its vital interest in developing the NER, India

should give as many concessions to its neighbors as possible. Leveling

unsubstantiated accusations regarding assistance to Indian insurgent groups by its

neighbors only serves to perpetuate hostility and suspicion. India should take the lead in

settling irritants and disputes. The settlement of the Ganges Water dispute and the peace

treaty in the CHT has markedly improved India's image in Bangladesh. Countries in all parts

of the world have disputes with neighbors but mutually beneficial cooperation is not given up

as a result of this. Interdependence enhances security so long as all parties benefit from it.43

The seeds for better cooperation are already evident. It is estimated that about 40,000

Bangladeshi students study in schools, colleges and universities in India. Thousands of

Bangladeshis regularly travel to India for medical treatment, religious reasons, shopping

and tourism every year. Increased people to- people contacts should remove

mistrust. Greater government and private sector interaction will build new highways

for cooperation. Hype, hyperbole and jingoism should be replaced by rational thought and

exchange of ideas.Bangladesh, on its part, has to assess the relative importance of its

disputes with India. Neither the resolution of the Land Boundary Agreement nor

that of South Talpatty is crucial to the economic prosperity and, the political and security

concerns of Bangladesh. However, redressing the trade imbalance and access of

Bangladeshi products to the Indianmarket is of considerable importance for the

economic prosperity of Bangladesh. Similarly, transshipment is important to Bangladesh

as it would not only lead to economic gains, but would also provide a political advantage in

its dealings with India. Once transshipment is provided, the states of NER will develop a

stake in maintaining good relations. Comparatively less important issues in India-Bangladesh

relations should not be allowed to cloud assessment of substantialmatters.

Economic aspects

Effect on Smuggling

Fears have been voiced that transshipment will result in increased smuggling

from India to Bangladesh. It has been stated earlier that over US $ 1 billion worth of goods

are smuggled from India into Bangladesh every year. There is evidence to suggest that law

enforcement agencies on both sides of the border collude in smuggling.44 Given the long and

porous border with India, smuggling is a function of demand and supply. If the demand for

Indian goods in Bangladesh increases it will be met both through official or unofficial

channels, and in the current state of affairs, almost irrespective of government efforts to stem

the flow. Cross border trade with India has shown that traders use fraudulent letters of credit,

false declaration of goods and incorrect specifications of quantities and values, to abuse the

system for smuggling. Recent surveys have indicated that extra 30% to 50% rice, over and

above the officially declared import amounts were brought in through land ports.45

Even if pre-shipment and post-shipment inspections are instituted road based

transshipment can still be misused for smuggling. However, if transshipment traffic is carried

in containers on railways it will be possible to significantly reduce the chances of smuggling

during transshipment. In terms of ease of movement, shifting between different railway

gauge systems and security of goods, containers provide appreciable advantages.

In addition, the government should be able to employ paramilitary forces with transshipment

trains to prevent pilferage and/or leakage reroute. Provision of extra security will curtail

insurance costs and thus increase earnings of BR and the government. Whatever means of

transshipment is used it will be essential to ensure effective independent inspection by

different authorities both at entry and exit points to prevent abuse. In case road based

transshipment is used, weighbridges have to be installed at all entry and exit points, and other

elaborate pilferage/leakage prevention mechanisms have to be implemented. Although

the bulk of Bangladeshi imports, as well as smuggling of goods from India,

comes through the western border, the ratio of unofficial to official trade is more

heavily skewed on the eastern border. In the eastern border, unofficial imports are said to be

several times46 more than official imports of about US $ 22 million yearly.47 Improvements

in infrastructure, direct trade and duty free access with the NER should raise incentives for

more trade through official channels and thus lead to more revenues for the government.

Maintenance and Rehabilitation Costs after Transit

As said before, the potential annual transit traffic at the initial phase could be 8 million MT.

For this quantity of goods to be moved annually, roughly 1500 trucks of average capacity of

15 MT will need to play every day.

• Including the domestic traffic of 750 trucks, total vehicular traffic in these routes will

be 2250 trucks per day, i.e. 3 times the current traffic.

• While with a doubling of traffic, the maintenance cost will not rise very substantially,

according to HRD’s Highway Development and Maintenance (HDM) model, the cost

of maintenance may go up by about 30-42 percent it the truck traffic is trebled.

• In absolute terms, for the routes likely to be used to allow transit, the maintenance

cost could be about 350 to 400 million taka every year.

• To avoid congestion in Dhaka city, through which nearly all transit traffic passes, the

50 km Gazipur-Narsingdi Feeder road should be upgraded (likely cost Tk. 1500

million).

• A new Tangail-Bhairab by-pass road stretching over 150 km should also be

constructed (likely cost Tk. 9000 million).

Financial Benefits and cost

Freight charges will be made by transportation companies i.e., by truckers in case of road

based and BR in case of railway transshipment. Profits will be divided between owners and

operators. It has been suggested that transport companies will be able to charge a profit of 10-

20% over and, above the cost of transportation.48 Transport business will also benefit

banking and insurance companies. In the case of road-based transit, repair shops, restaurants

and rest areas, toll charges on roads and bridges will also reap additional revenue. However,

it is not clear how the public exchequer will benefit from transshipment. Government will

have to spend heavily on repair of roads and bridges, maintenance of railway tracks,

rolling stock and locomotives, navigation system for IWT, maintenance of river ports,

seaports and other facilities. The gains to India are savings on transportation subsidies,

which they spend on NER, timesavings and savings on maintenance of

infrastructure.49 An estimate of all these savings should be calculated and

Bangladesh should claim 50% of those savings. A flat rate charge can also be levied on each

truck, container, or railway wagon carrying transshipment goods to be paid in US dollars at

the border. Alternatively, Bangladesh can decide to levy taxes depending on the volume and

type of goods transhipped. However, the latter system will require heavy administrative

efforts and will be prone to abuse, so a flat rate charge will be easier to implement. It has

been estimated that Bangladesh could earn between Tk 600-800 crore annually, through

transport charges, duties, taxes, tolls and compensation payments. Bangladesh could also

develop an export trade of US $ 50-100 million with the NER. Provided

transshipment could be arranged under sub-regional cooperation, exports to Nepal and

Bhutan could also bring in a similar amount.50 Transportation profits and duty revenue

would also accrue from transshipment traffic to Nepal and Bhutan. India should be persuaded

to invest in developing the railway, ports, and night navigation for IWT and road system in

Bangladesh. According to Muchkund Dubey, a former Indian Foreign Secretary, India will

be prepared to invest a sum of US $ 200 million for the expansion of Chittagongport.51

International financial institutions will also feel encouraged to participate

intransportation infrastructure development

• BD may benefit directly by raising services exports to India in the form of transit fee,

tolls and transport related service charges.

• Indirect benefits may accrue in the form of modernization and development of the

road infrastructure, increased opportunities for Indian investment, and growth of

ancillary services (vehicles repair, road-side restaurants etc.)

• Costs of the transit facility may include the cost of administering the facility, wear

and tear of roads and their maintenance, environmental costs, and costs of maintaining

the security along the transit route.

• A thorough study will be needed to determine these benefits and costs.

Estimates of Benefits of Costs

• Annual royalty is the major component of benefits. The royalty amount can be settled

by a dialogue with India. India now spends about Rs 100 billion every year in c/w

transportation across Shiliguri. If India parts with a half of this amount, both countries

will gain. BD could earn Rs 50 billion, or BDT 60 billion every year.

• Bridge tolls and ferry charges could earn BDT 1 billion every year. These two heads

can earn about BDT 61 billion per year.

• In addition, the cost of maintenance can be shared. Compensation for environmental

damage can be charged. There are also indirect benefits. These are not estimated here,

however.

• Costs: Maintenance and rehabilitation BDT 400 million, upgrading of road and

construction of new road is BDT 10.5 billion spread over 20 years. The yearly cost

should be BDT 525 million. Other expenses could be for surveillance staff and safety

and security of transit, perhaps BDT 1000 million. All costs could amount together to

1925 million annually.

• Net benefits to BD per year could thus be about BDT 59 billion or about $860

million. These benefits could be higher if the indirect benefits were taken into

consideration. A serious study is needed to ascertain the magnitude of the likely

benefits and costs.

Transit and trade

Now that India and Bangladesh are seeking to establish a more constructive pattern of

relationships they are, in a spirit of friendship, seeking to resolve some of the outstanding

problems which I have identified earlier. Most of these issues are readily solvable with the

application of some goodwill and much commonsense and are being discussed extensively in

our media. I will, therefore briefly focus on only two of these themes, trade and transit, where

I have more exposure to the issues involved.

From transit to exporting transport services

Transit appears to be the most vexed issue today. Much newsprint and talk time on TV has

already been invested on this issue so I will only focus on two aspects of the issues which are

particularly contentious: security and economics.

The arguments over security remain the most mystifying since they articulate an

apprehension that transit could be used by India to convey arms across our territory which

could be used to crush the insurgency underway in Assam. It is self-evident that we should

not involve ourselves in the conflicts of our neighbours but this should be established as a

universal principle. Ironically, perhaps the one occasion where transit has surfaced as a

security problem appears to have been back in 2004, when people in authority within

Bangladesh were willing to permit landing facilities in a public enterprise in Chittagong, to

be used to provide transit for the delivery of arms from abroad to insurgents in a

neighbouring country. No one back then appears to have lost much sleep over the political

and security implications implicit in such a misuse of our transit space.

How far India would be at all interested in using our transit facilities for military purposes

needs to be explored by those who are more knowledgeable on this subject than myself.

Presumably, India, which has been coping with insurgencies in the North East for 60 years,

has established a reasonably efficient and secure logistical chain across the land corridor

north of Bangladesh to service its forces in the North East. It needs to be clarified why, after

all these years; India's military planners would be at all inclined to expose this supply chain

to the uncertainties and hazards of movement across a foreign country.

Nor indeed has anyone in Bangladesh, to my knowledge, ever contemplated any such

possibility of permitting India or any other country to move troops or military hardware

across Bangladesh as part of any agreement on transit. There are any number of international

protocols, backed by increasingly sophisticated screening apparatus set up at international

borders, to ensure against movement of arms and other contraband items by a foreign country

across international boundaries.

Whilst security concerns relating to transit appear to originate in a misperception of military

logistics, issues of economic loss and gain from transit appear to be more relevant. Economic

logic guided India and Pakistan after 1947 when they became two separate countries.

Between 1947 and the Indo-Pakistan war of 1965, the rivers of the then East Pakistan were a

principal means of trade communication between West Bengal and North East India. Some of

the biggest corporate enterprises in East Pakistan at that time such as the Joint River Steamer

Company, Bengal River Services and Pak Bay, profitted greatly from carrying goods to and

from Kolkata and Gowhati in Assam. The government of East Pakistan invested heavily in

ensuring that these transit routes remained serviceable and sought foreign aid to improve the

efficiency of our transit facilities. River transit was discontinued at the outbreak of the 1965

war between India and Bangladesh.

This river transit across Bangladesh was resumed in 1972 but the river routes had, in the

intervening years, been silted up, night navigation equipment was in a poor state, so that

India's transit traffic, diverted from the river route to longer rail and road connections within

India, did not find it economic to return to the river routes. Today our rivers are in such poor

shape that night navigation, even by Bangladesh's vessels, remains a risky proposition. The

chance of the river route emerging as a major artery of transit traffic thus remains improbable

until we make major investments to resuscitate our river routes. Such investments in

Bangladesh's most cost-effective means of transport should be made irrespective of whether

we wish to attract transit traffic to enhance the carrying capacity of our rivers.

The issue of large investments is no less relevant for our road and rail system. As we are

witnessing today, during the period of heavy traffic during Eid, our transport infrastructure

appears quite inadequate to meet even our domestic needs. Even without transit traffic

Bangladesh will need massive investments in our road, rail and riverine infrastructure if we

are to even approximate our aspirations to graduate to a middle income country by 2021. In

such circumstances all future investments designed to meet the infrastructure needs of transit

traffic need not be exclusively attributed to transit. Any intelligent forecasting of

Bangladesh's transport needs would indicate that an economy growing at 7-8% would

generate much more internal traffic than transit traffic with the much less developed economy

of the North East. Indeed, the transport needs of Indo-Bangladesh traffic would make even

bigger claims on our infrastructure than will transit traffic.

The occasionally argued proposition that denial of transit would preserve the North East as a

captive market for Bangladesh is another questionable proposition. Trade with our "captive"

market today may be growing but still remains modest as may be expected from one of

India's most underdeveloped regions. Opening up the North East through better transit

facilities would expand our opportunities for trade not reduce it, because it would stimulate

economic growth in this region. Indeed, in the near future improved connectivity with the

North East would ensure that Eastern Bangladesh could emerge as a more competitive source

of supply to the North East than the rest of India. Indian businessmen would, thus, within a

more open trading system, find it more economic to set up joint ventures across the border in

Bangladesh, to supply the North East or to process the abundant raw materials of the region.

The operative issue is to use improved transport connectivity to establish stronger economic

links between the North East and Bangladesh. The fact that four chief ministers from North

East India are accompanying Dr. Manmohan Singh to Dhaka for the summit indicates that

such a prospect has not escaped the attention of the government of India, which is adopting a

more inclusive approach to these negotiations. It is notable that 2 of the 4 ministers from the

North East in Dr. Singh's delegation are from opposition parties!

At CPD we have, for many years in the course of various Indo-Bangladesh and regional

dialogues, argued that Bangladesh should situate the issue of Indo-Bangladesh transit in a

broader regional context associated with our commitment to the establishment of an Asian

Highway and Railway. Bangladesh should, accordingly, project its future as the Singapore of

the land routes, connecting Yunnan Province and South East Asia with South Asia. Transit

traffic between West Bengal and North East India or across Bangladesh, to our ports in

Chittagong and Mongla, should be viewed as a part of such a programme of improved

regional connectivity. This transit facility should also involve Nepal and Bhutan who should

be encouraged to treat Chittagong and Mongla as their own ports.

In developing Bangladesh's strategic location as a major economic resource Bangladesh

should not just limit itself to renting out our land mass to earn revenues from transit. We

should certainly negotiate the best terms we can for the use of our transit facilities. However,

in my assessment Bangladesh would sell itself short if we did not seek to add value to our

offer of these facilities to India. Our principal economic gains should be derived from

exporting transport services to those countries that would use our transit facilities. Both

Chittagong and Mongla port authorities would, thus, be able to earn substantial revenues

from the use of their facilities. Eventually, the economic benefits from our prospective

investment in a deep sea port would be enhanced by serving a regional rather than just a

national market.

Bangladesh Railways as well as the private road transport industry in Bangladesh should

aspire to extract the maximum benefits from transit traffic by preparing to carry the transiting

cargo and passengers across Bangladesh to and from North East India. Bangladesh Railways

as well as our container trucks, should aim to pick up cargo from Kolkata and points beyond,

for delivery across Bangladesh to Agartala and other locations in North East India. Similarly,

Bangladesh's IWT industry should establish itself as the principal cargo carrier across our

waterways to and from the North East. Indeed, if we resume export of IWT services to India

it would also provide a stimulus to Bangladesh's fast growing shipbuilding industry which

would build the carriers to service this enhanced river traffic. Exporting such transport

services to India would contribute to the development of industry in Bangladesh which could

draw in partners from abroad and would generate employment and investment in the

transport sector as well as in support services for the transport industry in Bangladesh.

Establishing Bangladeshi transport companies as the principal carriers of India's transit traffic

would have the advantage of eliminating controversy over heavy Indian trucks transiting

Bangladesh with its implications for their high load factor damaging our roads, as well as the

less relevant issue of national security. I am not sure if we have seriously raised this issue of

Bangladesh exporting transport services to India, in our official negotiations with India.

When such an issue was raised in civil society-based Indo-Bangladesh dialogues, the idea

received a positive response from our Indian colleagues. If we can package this proposal

intelligently this can be presented to India for consideration in the next round of negotiations,

as a win-win proposition. By the time Bangladesh has enhanced the carrying capacity of our

local transport infrastructure, a number of well equipped transport companies should be fully

prepared to provide competitive transport services to Indian customers serving the North East

or engaged in Indo-Bangladesh trade.

Similar joint venture trucking companies could be set up in partnership with Nepal and

Bhutan. Bangladesh railways could also enhance its revenues by offering it services to transit

traffic from India, Nepal and Bhutan. The end result of opening up such opportunities to

Bangladesh's transport sector would be the graduation of an as yet minor domestic industry

into a major multinational industry exporting transport services as well as developing a

transport manufacturing industry and servicing sector for transit traffic.

We should keep in mind that while India has much to gain from transit it has managed quite

well without it for the last 45 years. It has invested in building land and river links with

Myanmar to connect the North East with Sittwe Port. It has negotiated with both Thailand

and Myanmar to develop the Asian Highway so it can bypass Bangladesh. It is now up to

Bangladesh to reconnect ourselves with these transport opportunities. It requires an

exceptionally negative mind set to punish ourselves by not availing ourselves of the

enormous advantages available to us by our fortunate geographic location. The answers again

lie not in disconnecting ourselves from our neighbours but in identifying all possible ways of

benefitting from our location.

Statesmanship over trade

Trade cooperation between India and Bangladesh has moved forward, though this process has

taken much longer than was necessary. In this area, India's tardiness to move forward has

been costly to both sides. India's exports to Bangladesh have grown exponentially over the

years so that, along with China, it is Bangladesh's largest source of imports. Indeed, if we

take into account unofficial exports across our borders, India is the largest source of imports

into Bangladesh. Whilst Bangladesh's exports to India have lagged behind it has also

expanded five-fold over the last 5 years and has crossed $500 million in 2010-11.

India's export growth to Bangladesh has little to do with special preferences provided to

India.

After all, the biggest growth in Indian exports was registered during the two BNP regimes in

1991-96 and 2001-2006. Saifur Rahman, finance minister in those two periods, could hardly

be termed as a special friend of India, for stimulating their exports to us, though he played an

important role in liberalizing Bangladesh's global import regime. Within a competitive global

system Bangladesh's private sector has found it profitable to do business with India.

Bangladesh's RMG as well as textile sector is today an important customer of Indian fabrics,

yarn and cotton which are then converted into garment exports to the US and EU, our

principal markets. When we feast on seekh kababs we are quite possibly using beef extracted

from a smuggled Indian cow; when we tune in to our private TV channels much time is spent

in watching Indian movies and other such entertainment programmes. Large numbers of

Bangladeshis travel to India to utilise their health care, education and tourism services as well

as make pilgrimages to religious shrines. All these choices are made by private Bangladeshi

consumers so that the growth of India's exports is an essentially market driven process. As

the improving quality and competitiveness of India's economy further adds value to their

proximity our imports of goods and services will also continue to increase.

As it stands, Bangladesh cannot hope to match this growth of imports from India nor does it

make much economic sense to complain about our growing trade deficit. I have yet to know

of any newspaper article or seminarist raise any concern about the fact that China's trade

surplus with Bangladesh exceeds that of India and will also continue to grow in the future.

Bangladesh's export capacity is constrained by our production structure. 75% of our exports

in fact consist of RMG where India also has a highly competitive and indeed much larger

industry, than ours.

While India has been slow to open up its import opportunities for Bangladesh and has

operated a variety of non-tariff barriers (NTB) which have constrained our export

opportunities, we should not get too carried away by the possible gains to us from the lifting

of these restrictions. The constraints to expanding exports to India do not originate

exclusively from India's restrictive trade regime. After all India's import market now exceeds

$300 billion and is being accessed by a variety of exporters from Asia, such as China,

Vietnam, Thailand and Indonesia without the benefit of any tariff concessions. Indeed, even

Pakistan's exports, which are exposed to a variety of restrictions by India, exceed those of

Bangladesh. Our small and rather undiversified industrial and export structure limits our

export opportunities no less than India's import restrictions.

As it transpires, India has already permitted duty free exports from Bangladesh under the

Saarc concessionary provision for least developed countries (LDC). The real problem is the

size of India's negative or sensitive list which denies this tariff concession for a variety of

goods of export interest to Bangladesh. Over the years and through intense negotiations this

negative list has been cut down to 460 items. Even this figure is ridiculously high for a

country with one of the world's largest economies. This list still includes RMG, Bangladesh's

most competitive export. India has recently offered us a quota of 8 million garments which

we can export, duty free, to India, which has now been raised to 10 million items. Our

competitive RMG exporters have already utilised this quota within the first 7 months of the

calendar year 2011. We have, in recent negotiations prior to the visit of Dr. Manmohan

Singh, presented a list of 61 commodities of export interest to Bangladesh, to be removed

from the negative list. Of these, 47 items are from the RMG sector for items where

Bangladesh is particularly competitive. It is reported that such a concession may be offered

by India during the forthcoming summit in Dhaka which would significantly enhance our

exports to India.

Rather than continue with this dance of the seven veils, where India offers export

opportunities to Bangladesh on a piecemeal basis, the time has come for a bold and decisive

gesture on the part of India which has little to lose in opening up its markets to Bangladesh.

Ideally, I would like Dr. Manmohan Singh, who is not only a reasonable and decent human

being but is also a distinguished professional economist, to make the following

announcement during his visit to Bangladesh:

"On the occasion of this historic visit I wish to declare before the people and particularly the

business community of Bangladesh that, as of today, Bangladesh should treat India's market

as its own domestic market. I guarantee your exporters unrestricted access to this market and

invite you to build partnerships with India's business sector to make full use of this market.

We will constitute a committee of Indian and Bangladeshi experts to work out, within the

next 6 months, the modalities of fully implementing such an arrangement."

Such a statement which should, ideally, have been made by an Indian prime minister at least

20 years ago, will not immediately lead to a surge of exports from Bangladesh into India. Our

exports, led by our RMG exports to India, may possibly cross the $1 billion mark in the next

year which will partly reduce our trade deficit. The more significant outcome of Dr. Singh's

statesmanlike gesture will be to change the business horizons of Bangladeshi entrepreneurs

who will begin to explore all possible opportunities to access this market of 1.2 billion

people. In this task they will seek out not just partners from India but from the rest of the

world from those companies who will hope to use Bangladesh's geographical proximity as an

export platform to access one of the largest and fastest growing markets in the world. The

enormous business opportunities across our immediate borders will not just encourage the

flow of foreign investment into Bangladesh but would significantly enhance and diversify our

industrial structure. Such a transformation in the horizons of our business sector will make

large numbers of one of Bangladesh's most influential and resourceful communities into

stakeholders in the improvement and sustainability of Indo-Bangladesh relations.

Commonsense should have persuaded the Indian leadership that the political gains from

opening its economy to Bangladesh would be significant whilst the economic costs to its

much stronger economy would be negligible. By dragging their feet on the issue of duty free

exports from Bangladesh, India gratuitously built up antagonism in areas where they had

prospective friends. This was poor politics as well as economics. It remains to be seen

whether Dr. Manmohan Singh, on September 6, 2011, will rise to the occasion through an act

of statesmanship which could have a transformative effect on Indo-Bangladesh relations.

Political aspect

Refusing Transit to India : Is Bangladesh missing something?

1. India has proven itself as an untrustworthy friend. During the liberation war, while helping

Bangladesh liberation, it secretly built the Farakka dam. “Farakka was commissioned on

permission from Mujib on the condition that it will have test run for only 40 days. But

unfortunately those 40 days is yet to be finished (even after 37 years) and Bangladesh is

getting the pinch of dry rivers. Further 54 other international waters were stopped by the

friend of BAL making barrage/dams/ groins virtually making lower riparian country

Bangladesh’s rivers dry.”

During Mujib time, the Rakkhi Bahini head was made an Indian. The jute head quarter was

transferred to Delhi. With the Mujib -Indira Pact, river demarcation based on the mid current

was made a farce. Bangladesh is losing land. It is now a serious problem. Mujib was

persuaded to hand over the sovereignty of “BERUBARI” in return of “Tin Bigha.”But Tin

Bigha was never returned. A Berline wall was built in Bengal to so-called stop Bangladeshis

cross the border. India jammed the Bangladesh TV. As a matter of target practice, India

regularly kills Bangladeshi joans in the border region. Even before the investigation, India

blames Bangladesh for terrorist actions within its borders.

“Due to sinking of several ships in Chittagong Port during Liberation War…, it was difficult

to import …essentials for war torn Bangladesh. Bangladesh requested India to just to allow

using Calcutta Port for only six months in 1972. India refused the request.” “Bangladesh

wanted only 16 miles transit to pave for easy trade between two SAARC countries

Bangladesh and Nepal.” But it was refused. Now India wants 600 miles of corridor.

Bangladesh should never allow transit to India.

2. Without the transit, India’s seven non Indian sisters in the North East that now depend on

Bangladesh for manufactured goods, but with transit, India will sell its own product to the

region and Bangladesh will lose.

3. India doesn’t want to allow Bangladesh to have land route with Nepal and Bhutan which is

purely for trade purpose, India shows the excuse that it goes against its territorial integrity,

using the same logic Bangladesh cannot allow transit.

4. Financial benefit from transit fees would outweigh its other disadvantages. Bangladesh

would risk destroying its own roads and highways, infect its citizens AIDS. Roads and

highways will be neglected by the chauvinistic Indian traders and military personnel are

passing through Bangladesh’s heartland.

5. India is an unreliable keeper of promises. It failed to keep up to the signed treaties of

Barubari/ Farakka. India first fix these problems than only trust building will lead to transit..

RAW fed Indian chauvinistic government will never go for a fair deal because its sole

purpose is to help Bangladesh into a failed state.

6. Transit through Bangladesh will allow India to increase its repression in its occupied North

East. For such repression, Bangladesh suffered in the hand of Pakistan and now as a peace-

loving country, it shouldn’t allow India to increase its repression over its non Hindi/ largely

Asian/ Christian and Buddhist minority people unfortunately made part of India. At the same

time such a deal would make Indian separatists rebels make Bangladesh a target.

7. Indian treaties are politically motivated. While Mujib signed the Mujib-Indra Treaty 25

year treaty results in the beginning of trade deficit, water shortage, border issues dispute, and

dependence on India resulting in the India friendly Mujib’s unpopularity and within a short

period of time made Bangladesh bankrupt, “the bottomless basket case” and brought his own

death. If the past experience with India is a guide, it is believed that people in favor of transit

to India are the ignorant India- lovers popularly known in Bangladesh as the “Indian

Razakars” who are inviting trouble for Bangladesh. For such an issue we suggest for a

national referendum. If people decide, let it be, if not, never!

Why the CTG to bother on the transit issue which the former two governments? It appears

that the CTG was brought to power by groups aligned with foreign powers, one of them is

India. The CTG brought to power through the excuse of anarchy. It seems it is showing its

responsibility to its constituency-India.

It was through the AL led unrest and anarchy in late 2006-2007 that evaded the 90 days limit

of the CTG duration. It appears that the CTG’s corruption charges are not real but to have the

minus 2 policy and to install a future Moin U military government! This is now evident in

General Moin U receiving the Indian 7 horses.

As it appears, Bangladesh is infested with RAW agents and unrest in the cities and in tribal

areas continues while countries like Vietnam and Singapore continues the pace of

development.

If allowed transit within the country, it will be bringing crocodile through digging a canal.

Once transit is given, Bangladesh will not be in a position to take it back. India is

increasingly becoming powerful. It will kill Bangladeshis with the excuse of being terrorists

or drug -dealers, as US does in Columbia with its puppet government. India also has super

connection with the Super Power US- Israel. For Bangladesh, India is a danger in the

making! Never allow transit to India!

India is building war fleets and torpedoes to keep its growing power from Africa up to

Australia in the Indian Ocean. Without the transit, Bangladesh’s existence is almost

threatened but with transit, like the US-Pak former friendships, and today’s Pakistan,

Bangladesh will be a breeding ground for anti-US- Indian fundamentalism. Never allow

transit to India!

Finally, why India is forcing Bangladesh’s nonelected government for a deal? The answer is

India is not a trustworthy friend. Its attitude is to create pressure and seek concession.

Bangladesh to survive should never allow transit to India.

Transit Related Issues and Concern

• Provision of a sound road infrastructure apart, effective transit arrangement will call

for the presence of appropriate regulations and measures for tackling concerns

relating to safety and security of transit traffic, monitoring and management.

• Technical safety concerning conditions of roads, bridges, robbery and theft.

• Administrative safety aspects concerning traffic laws and their enforcement.

• Non-technical obstacles that may block transit, such as hartal.

• National security concerns should be of topmost consideration.

• Goods will need to be moved in closed trucks and containers with registered customs

seals.

• Cargo must not include contraband items, drugs, arms and military equipment.

• Scanning equipment will need to be installed to detect the presence of forbidden

goods.

• In case of false declaration, the authorities will have the right to confiscate the

consignment.

CONCLUSION

Bangladesh and India are close geographical neighbors. While Bangladesh feels 'surrounded'

by

India, India also feels that her landlocked NERw states are Bangladesh locked. Geography

and common economic interests dictate that Bangladesh and India co-operate in the

transportation sector. There is an economic case for transit/transshipment of Indian goods by

road, rail and river across Bangladesh to and from NER. Road transport infrastructure in

Bangladesh has limited capacity, indeed, in critical places like the Dhaka region,

no excess capacity at all to accommodate transshipment traffic. Absence of bridges at

Mawa and Paksey also severely limit the capacity for road-based transshipment. Road

transshipment of Indian goods can be undertaken only after a massive and sustained

investment by the user country i.e. India on upgrading and maintaining Bangladesh

highways. The transshipment toll should be such that Bangladesh, after meeting the road

maintenance expenses, is left with adequate funds for future expansion of

communication network. IWT is also another viable means for transshipment,

especially once the East and West Railway Zones are connected via the JMB.

The railway system, particularly the West Zone, is significantly underutilized and

is operating at a huge annual loss. Transshipment provides the scope to make BR

profitable and thus stem hemorrhage of public money. The railway system can, through

transshipment, attract funding to improve its infrastructure, rolling stock and services. Gauge

conversion to BG or dual gauge and building second pair of tracks on busy routes should be

addressed immediately. Chittagong port is ideally placed to become the 'hub port' of the

entire sub-region. In fact, Chittagong can attract additional traffic provided it improves its

efficiency to international standards. Private port is a sine qua non for port capacity building

and efficiency improvement for Chittagong. In fact, even with private port the projected

growth of sub-regional traffic and domestic demand will outstrip capacity within a

decade. Transshipment should be considered under the framework of a sub

regional agreement. It should include transit and transshipment rights for Nepal and

Bhutan. This will enable Bangladesh to obtain maximum trade and transportation benefits.

Preferably, a regional transportation agreement under the Kunming initiative should

be a long-term objective of transport cooperation in this region. However, full

exploitation of sub-regional transportation business will require considerable

investment in order to expand the capacity of transport infrastructure. It is

possible for Bangladesh to earn between Tk 600 to 800 crore annually through

transshipment. However, much will depend in the manner various charges, duties and

royalties are levied. Direct compensatory payments between the two governments will also

have to be negotiated.