India opens new routes to strengthen trade ties with Bangladesh, Bhutan

In a bid to boost its economic and connectivity linkages with its neighbours, India in recent days has opened two new routes for trade with its key neighbours Bangladesh and Bhutan.

Responding to a request from the Royal Government of Bhutan, New Delhi opened a new trade route under the Jaigaon Land Customs Station last week. The new trade route is through Ahllay near Pasakha in southeastern Bhutan, two people familiar with the matter said adding that it was opened on 15 July.

“This new land route for movement of industrial raw materials and goods destined for Pasakha Industrial Estate will boost bilateral trade and commerce and lead to decongestion of vehicular traffic along the Jaigaon - Phuentsholing route,” one of the people cited above said.

Trade between India and Bhutan through the Jaigaon-Phuentsholing border trade point amounts to approximately ₹6,000 crores annually. Bhutan’s trade with countries other than India through this border trade point is an additional ₹1,400 crores annually. This trade point caters to around 75% of the overall trade between the two countries and around 74% of Bhutan’s overall trade with the world, the person cited above said.

The India-Bhutan Agreement on Trade, Commerce and Transit which was last renewed in 2016 allows for free trade and commerce between India and Bhutan and the pact provides for about 21 entry or exit trade points between India and landlocked Bhutan. This includes 10 trade points with Land Customs Stations (LCS) at the Indo-Bhutan border. Bhutan uses some of these to trade with third countries.

Besides the new trade point, India is also looking at fast tracking a railway link between Mujnai in West Bengal and Nyoenpaling in Bhutan. India’s Railways Ministry has already started a feasibility study on the link, the second person cited above said. India’s Land Ports Authority has also identified Jaigaon, in Alipurduar District of West Bengal, for development of an Integrated Check Post to cater to railway link once established.

On it part, Bhutan has requested to notify Jitti-Nagrakata LCS as a permanent station as it was notified as a seasonal one in 2013 for trade in three crops namely only – ie orange, ginger and cardamom. Bhutan made the request mainly to facilitate export of boulders and river bed materials to India and Bangladesh particularly since Bhutanese exporters were finding it difficult to export these through the nearest Permanent LCS at the Loksan-Bhimtar crossing due to high transportation costs and restrictions on load capacity over river bridges on the route.

“Bhutan is India’s closest partner and India will continue to positively engage with Bhutan in an effort to boost trade between the two countries, through enhanced connectivity, among others,” the first person cited above said.

“These efforts will further have a positive effect on the trade growth with North Eastern States of India,” the person added.

In another development, last week India flagged off the first trial of container ship from Kolkata to Agartala through Chattogram port of Bangladesh. This is the outcome of a pact signed by the two countries on coastal shipping in 2015 and another in October 2018 on the use of Chittagong and Mongla Ports for trans-shipment of goods to and from India. During the visit of Bangladesh Prime Minister Sheikh Hasina to India in October 2019, both sides had welcomed the conclusion of Standard Operating Procedures for the use of Chattogram and Mongla ports for movement of goods to and from India, particularly to and from India’s North East, creating a “win-win” situation for both countries.

Eight routes have been provided under the 2019 pact which will enable access of India’s northeastern region via Bangladesh. The routes identified include Chattogram or Mongla Port to Agartala in Tripura via Akhura, Chattogram or Mongla Port to Dawki in Meghalaya via Tamabil, Chattogram or Mongla Port to Sutarkandi in Assam via Sheola and Chattogram or Mongla Port to Srimantpur in Tripura via Bibirbazar.

For India, the use of the Bangladesh ports would cut the time required for transportation by allowing three landlocked northeastern Indian states access open sea trade routes from Chattogram and Mongla ports via Indian ports. For Bangladesh, the spinoffs come in the form of job creation, boosting prospects for investment in the logistics sector, supply chain integration and promotion of business services like finance, transportation and insurance, says industry representatives.