The truck that could change the face of trade in South Asia

A truck from Dhaka, headed to Delhi, could herald the future of a border-less South Asian mega-market

A truck that left Bangladesh capital Dhaka on August 28 and is expected to its destination – New Delhi – on Monday could mark the first step in creating a seamless market for a number of South Asian countries, the Economic Times reported on Monday.

The countries involved in the first-of-its-kind initiative are India, Bhutan, Bangladesh, and Nepal. Pakistan is not a part of the initiative.

The truck's journey is a pilot for transport across a customs-free border and is being monitored in real-time, thanks to an electronic tracking chip, the report said, adding that this could become the template for other forms of cross-border transport too. 

No borders, many benefits

The report added there would be clear cost and time benefits. 

Nidhi Dua, India country manager for Marks & Spencer, where the consignment is headed for, said: “We are expecting the freight cost to come down by 20 per cent and transit time by three days due to this." Dua added, "Earlier the Bangladeshi trucks had to be offloaded at the border and the goods shifted for onward journey into India in Indian trucks."

Further, eliminating the need to transfer goods between vehicles at the border will reduce exposure to damage caused by weather and pilferage, the report added.

How does the new system work?

Under the Motor Vehicles Agreement (MVA) signed among the countries in June 2015, seamless movement of people and cargo among the signatory nations is allowed. The report said that the agreement allows trucks to cross borders with a cargo manifest and a document seeking temporary admission. 

Under the new system, the report added, an electronic seal will be affixed to a vehicle when it reaches the first land customs station in the destination country. The journey of the truck from Dhaka is part of the trial run which will help formulate the necessary protocols for facilitating trade while still maintaining effective controls. 

The truck from Dhaka will file a bill of entry at the Inland Customs Depot in Patparganj in Delhi before it is cleared, a senior customs official told ET. 

"We have been monitoring the truck's movement since it left Benapole, the Bangladesh checkpost near Petrapole," said the official, adding, "Customs duty on the goods would be paid in Delhi before they are released to the company."

What does this mean going forward?

The MVA is the first stage of the $8-billion road connectivity project, which was set to begin in October last year. According to reports in June last year, Myanmar and Thailand have agreed to develop a motor vehicle pact on the lines of the draft South Asian Association for Regional Cooperation MVA, to pave the way for greater economic cooperation in the Association of Southeast Asian Nations region.

According to the ET report, the World Bank expects that South Asian intra-regional trade as a whole will rise 60 per cent as a result of the agreement.