India and Bangladesh signed the standard operating procedure (SOP) in New Delhi on Sunday, to operationalise the Agreement on Coastal Shipping, signed between the two countries in June, 2015.
The SOP will pave the way to promote coastal shipping between India and Bangladesh and would enhance bilateral trade between the two countries by bringing down the cost of transportation of EXIM cargo.
The SOP contains provisions which stipulate that India and Bangladesh shall render same treatment to the other country's vessels as it would have done to its national vessels used in international sea transportation.
The two sides have also agreed upon the use of vessels of River Sea Vessel category for Indo-Bangladesh coastal shipping. Speaking on the occasion, Nitin Gadkari, Minister of Road, Transport, Highways and Shipping said that once it is operational, the Coastal Shipping Agreement would enable a huge saving in logistic costs of EXIM transport between the two countries. The SOP has been framed as per the terms and conditions of the Agreement on Coastal Shipping and both India and Bangladesh have agreed to its provisions.
The present connectivity through sea route with Bangladesh is through ports of Colombo and Singapore. The long sea route adds significantly to the transportation costs of EXIM trade. There is no significant cargo movement between sea ports of Bangladesh and India as it is not profitable for the big vessels to operate between these sea ports. Under such circumstances, there is a need for smaller ships to provide direct connectivity between the eastern sea ports of India, Chittagong and other ports in Bangladesh. This, besides improving the connectivity would also provide competitive freight rates.
The two countries will also hold Shipping Secretary level talks on Monday, which would cover the issues relating to memorandum of understanding (MoU) on passenger and cruise vessel movement, discussion on the protocol to operationalise the MoU on use of Mongla and Chittagong ports, payment of transit fees and bank guarantee, dredging of rivers in the protocol route using Regional International Development Assistance of World Bank Assistance, discussion on various upcoming port projects in Bangladesh.
Advantages of the Agreement:
1) The opening of coastal shipping between India and Bangladesh would enable the movement of cargo to the North East through coastal shipping upto Chittagong and thereafter by road/inland waterways.
2) The deep draft ports on the eastern coast of India can be 'hub ports' for the onward transportation of cargo to Bangladesh via the coastal mode through RSV category of vessels.
3) The Indian ports will attract enhanced cargo and also the overall transportation cost to Bangladesh will get reduced.
4) The Indian ports serving as trans- shipment ports for Bangladesh cargo will derive benefits by way of enhanced throughput as a result of Indo-Bangladesh coastal trade.