India, Bangladesh set to sign historic Motor Vehicles Agreement

Trucks from each side will be allowed to ply

India and Bangladesh are set to sign a historic deal wherein cargo trucks from both sides will be allowed to ply within each other’s territories. This will be for the first time when India will enter such an agreement with any of its neighbouring countries with which it has land connectivity.

The agreement known as the ‘Motor Vehicles Agreement’ had been pending for more than five years now. The ministry of commerce and industry has presented them the draft proposal earlier this year. While the government of Bangladesh is still “examining the proposal” it is expected that the deal will be able to finally go through before India head for elections next year.

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

Presently, trucks from both sides are allowed to enter 150 kms 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, it will also address the inadequate infrastructure problems that create a lot of hassles for exporters on both sides.

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 (UNGA) 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 Tariq A Karim to expedite the matter. However, Bangladesh is facing severe infrastructure problems presently, thus, they might delay signing the deal as this will entail major infrastructure overhaul.

According to a CII study, inadequate warehousing, cargo handling equipments, customs and immigration facilities and means of communication at some of the road and rail based land ports on both sides continues to impede 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 between India and Bangladesh reached $5.14 billion in 2012-2013 from $3.78 billion in 2011-2012 and $3.24 billion in 2010-2011.