India plans coastal shipping with Bangladesh

India and Bangladesh are expected to start coastal shipping from October this year, according to Director-General of Shipping Gautam Chatterjee.

The move is a part of the proposed agreement between the two nations to open sea routes to promote bi-lateral trade.

In the absence of direct shipping arrangement; India and Bangladesh are now heavily dependent on costly land routes for the $6-billion bilateral trade.

Transportation cost

bd-indiaRough estimates suggest coastal shipping may reduce the costs of transportation by 20 to 40 per cent, when compared to rail or road transportation, ensuring greater competitiveness to exporters from either side.

Addressing a seminar at the Bengal Chamber of Commerce and Industry (BCC&I) in Kolkata on Friday, Chatterjee said at a recent ministerial meeting in Dhaka, the shipping arrangements were more or less finalised and the trial run may start as early as in October.

Ports identified

Mooted in 2012, both the nations have already identified a number of ports for operating such services.

Bangladeshi services will be operated from Chittagong, Mongla and Pangaon. The Indian ports include Paradip, Visakhapatnam and Haldia.

While use of smaller vessels were preferred by both sides to keep the transportations costs low; there was a difference of opinion on the quality of vessels to be used.

While Dhaka wanted major relaxation on fitness of vessels; India insisted that to ensure maritime safety, Bangladeshi vessels should comply the standards set by the Indian Registrar of Shipping (IRS).

The Indian standards are much diluted when compared to the international norms.

After nearly a year long persuasion, Bangladesh recently agreed to the proposal and identified 20-25 vessels for the purpose.

Interest subvention

The DG Shipping feels the Indian Government may consider interest subvention on capital cost of acquiring new River-Sea Vessels (RSV).

Nearly 70 per cent of the RSVs are “old”, leading to high operation and maintenance costs, he said.

Despite a policy focus on coastal shipping, not a single new RSV was added into the fleet by Indian operators, as the bankers deny credit facility due to low availability of “assured cargo”.“I think interest subvention, may help break the jinx,” Chatterjee said.