India may allow entry to freight vehicles from Bangladesh

India may allow vehicles from Bangladesh to enter and ply in the country when they bring goods, in a big brother gesture to improve bilateral ties and facilitate trade by reducing freight costs and decongesting borders.

The measure was originally planned as a bilateral agreement, but with no response from Bangladesh for about a year, the commerce department has now proposed a unilateral offer, government officials said, reports the Economics Times.

bd-indiaThe commerce department had written to the road transport and highways ministry, which would be in charge of framing the rules and protocol, about the proposal to unilaterally allow Bangladeshi vehicles to ply in India. And the latter has given a conditional acquiescence.

“We have written back saying that we support the proposal but it needs to approved by the Cabinet given that the offer is a unilateral one. There needs to be clarity on whether and when it would translate into a bilateral agreement from which we could also share the benefits. Stakeholder ministries like home affairs need to be on board for this,” a highways ministry official told ET.

A commerce department official said a final decision will be taken only after the Cabinet clears the proposal.

At present, vehicles carrying cargo from both sides have to unload the goods at border check posts. The goods are then transferred to vehicles of the importing country to be taken to their destinations. This unloading and loading — combined with the rapid rise in bilateral trade growth that has crossed $5 billion (approx Rs 31,000 crore) — has led to massive congestion at the border, especially at the land Custom stations or integrated check posts, besides taking a toll on trade transaction and freight costs of exporters and importers.

If India goes ahead with its move, it will significantly bring down trade costs and speed up goods movement from Bangladesh to India. The highways ministry official quoted earlier said that to facilitate the move, the ministry would need to frame rules under the Indian Motor Vehicles Act, 1988 as well as protocol and procedures particularly regarding acceptable documents.

Ram Upendra Das of Research and Development System for Developing Countries ( RIS), an autonomous think tank under the ministry of external affairs, welcomed the proposal. “It will be a very good gesture from India’s side, which will give confidence to Bangladesh to reciprocate it as they get more access to the Indian market,” he said.

A bilateral Motor Vehicles Agreement (MVA) to enable vehicles from both sides to enter and ply within the other’s territory was mooted years ago. In fact, in 2011, Prime Minister Manmohan Singh and his Bangladeshi counterpart, Sheikh Hasina, had agreed to work towards concluding the agreement. However, officials said, the draft bilateral agreement sent to Bangladesh by the highways ministry has been pending with Bangladesh for about a year. Hence, the proposal for a unilateral offer.

It won’t be the first time that India makes a unilateral offer to Bangladesh. Under the South Asian Free Trade Area (SAFTA) agreement, India provides duty-free, quotafree access to all but 25 products to them.