Improving trade with neighbours through land route, top priority for Ministry of Commerce & Industry
What is common between Marks & Spencer, VIP Industries, Reliance Retail, Raymond Apparel, Aditya Birla Fashion and Retail and Puma Sports? All these companies are sourcing their requirements of apparel and related goods from neighbouring Bangladesh and transporting into India through Petrapole-Benapole (Bangladesh) border.
Not just the importers into India! Companies like Tata Motors, Ashok Leyland, Hero Motorcorp, Mahindra and Mahindra, VE Commercial Vehicles (manufacturer of Volvo and Eicher Trucks) and textile manufacturer Arvind are using the integrated check post (ICP) of Petrapole-Benapole on Bangladesh border to export their products to Bangladesh. With enhanced facilities on the border, more and more traders are using the land route to import or export and the trade is flourishing, so much so that Marks & Spencer and VIP Industries paid about Rs. 11 crore each as import duty through this border ICP in 2017-18.
Ministry of Commerce & Industry has recently enhanced its focus on improving trade with neighbours and is moving ahead to fast-track trade facilitation infrastructure on its border. One particular reason is the trade competitiveness with China which through its Road & Belt Initiative has enhanced its connectivity with neighbouring countries significantly resulting in easier access to its cheaper goods. China is creating a rail-link to Nepal and has ongoing road projects with almost all its neighbours and even beyond. Better connectivity with neighbouring countries, resulting in enhanced trade will also help improve ties with the neighbours, it is hoped.
This step can also help land-locked countries such as Nepal and Bhutan get access to seaports.
Informed Suresh Prabhu, Union Minister for Commerce & Industry in a chat with journalists recently: “The potential for India’s export to SAARC countries is $61 billion as against $14 billion now” adding further that “a healthy trade relationship with a neighbour often results in a healthier diplomatic tie, too.”
With trade and other strategic interests foremost in mind, India has already transformed seven LCS, out of 109 LCSs, into ICPs. These include Attari (India-Pakistan border), Agartala (India-Bangladesh border), Raxaul (India-Nepal border), Jogbani (India-Nepal border), Moreh (India-Myanmar border) and Dwaki in Meghalaya (India-Bangladesh border) besides Petrapole ICP on India-Bangladesh border. Additionally, 13 LCS are being upgraded into ICPs at a cost of Rs. 4500 crore, which will include seven border posts with Bangladesh – Hili, Fulbari, Changrabandha, Ghojadanga, Mahadipur, Sutarkandi and Kawpuichhua – and six posts with Nepal and Bhutan. Once all the 20 ICPs (including the 13 being developed now) are ready and operational, the trade bottlenecks would be eased a lot.
It is to be recalled that India has a 15,000 km land border with 7 countries viz. Pakistan, Nepal, China, Bhutan, Bangladesh, Myanmar & Afghanistan. In 2017-18, India’s trade through land borders was $13 billion, which was only 1.7% of the country’s total trade worth $769 billion. Exports through land route constituted $11.3 billion, accounting for 3.7 per cent of total exports worth $303 billion in the same period. Even in the case of Bangladesh, which is surrounded by India on three sides, about 50 per cent of export and 75 per cent of import took place through land border, out of total export to Bangladesh of $8.6 billion and import of $685 million in 2017-18.
As regards to Nepal, 97% of the export worth $6.6 billion took place through land route while with Bhutan 96% of export worth $546 million took place through land route. Only 14% of the total export of $1.9 billion to Pakistan was through road. Figures are not the same for import! In 2017-18, 75% of the $685 million import from Bangladesh, 53% of the $377 million import from Bhutan, 99.8% of import worth $438 million from Nepal and 48% of $488 million worth of import from Pakistan took place through land route.
ICPs on borders are a big time saver as immigration and custom officials sit in adjacent buildings for faster clearance of goods and passengers. Some of the ICPs provide amenities like parking bays, weighbridges, cargo terminals, warehouse facilities, public utility facilities, banks/ATMs, foreign exchange bureaus and cafetarias, among others. As Suresh Prabhu, the Union Minister for Commerce & Industry conveyed, the potential for India’s export to SAARC countries is $61 billion as against $14 billion at present, the trade is going to see a big boost when all the 20 ICPs become operational.