India, Bangladesh set to sign motor pact in trade push

Trucks from each side will be allowed to ply within each other's territory

India and Bangladesh are set to sign a historic deal to allow cargo trucks from both sides to ply within each other’s territories. This will be for the first time India enters such an agreement with any of its neighbouring countries.

The agreement, known as the ‘Motor Vehicles Agreement’, had been pending for quite some time. The ministry of commerce and industry had presented the draft proposal to Bangladesh earlier this year. While Dhaka is still “examining the proposal”, the deal is expected to inked before India heads for elections next year.

“Bangladesh has already agreed to the proposal multilaterally under the SAFTA (South Asian Free Trade Area) framework. We have only asked them to do it bilaterally,” a senior commerce department official told Business Standard.

At present, trucks from both sides are allowed to enter 150 km within each side of the border where they unload and pick up the cargo. However, under the proposed deal, trucks from Bangladesh will get permission to drive till their destinations where it will unload the cargo. Similarly, Indian trucks will be allowed to move inside Bangladesh to unload and pickup the items required.

For example, if a particular truck from Bangladesh carrying garments have to deliver a consignment in Mumbai, it will be allowed to drive till Mumbai and unload the shipment there. Similar procedure will be allowed for Indian container trucks. The official said this will not only help reduce the heavy congestion on the border, but will also address the inadequate infrastructure problems that create hassles for exporters on both sides.

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The matter was also touched upon during the bilateral meeting between Prime Minister Manmohan Singh with his Bangladeshi counterpart Sheikh Hasina on sidelines of the United Nations General Assembly in New York, according to an official who did not wish to be identified.

It is learnt that the commerce department has also taken up the issue with Bangladesh High Commissioner to India, Tariq A Karim, to expedite the matter. However, there is a possibility that Bangladesh might delay signing the deal as it is facing severe infrastructure problems and inking the deal will entail major infrastructure overhaul for which the country may not be ready at the moment.

According to a study by the Confederation of Indian Industry (CII), inadequate warehousing, cargo handling equipment, customs and immigration facilities and means of communication at some of the road- and rail-based land ports on both sides continue to impede the two-way trade.

“Bilateral transport agreement such as the Comprehensive Motor Vehicular Agreement is needed for seamless cross movement of cargo up to the delivery point and undoing the inconvenience of physical trans-shipment of goods at borders, which would to a large extent help in overcoming the present requirement of trans-shipment of cargo at the border points,” CII said.

Bilateral trade reached $5.14 billion in 2012-2013 from $3.78 billion in 2011-2012 and $3.24 billion in 2010-2011.

A HISTORIC MOVE

* The agreement, known as the 'Motor Vehicles Agreement', had been pending for quite some time. The ministry of commerce and industry had presented the draft proposal to Bangladesh earlier this year. While Dhaka is still "examining the proposal", the deal is expected to inked before India heads for elections next year

* At present, trucks from both sides are allowed to enter 150 km within each side of the border where they unload and pick up the cargo. However, under the proposed deal, trucks from Bangladesh will get permission to drive till their destinations where it will unload the cargo

* This will be for the first time India enters such an agreement with any of its neighbouring countries