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Indo-Bangla shipping trials expected to take off this month

INDIA and Bangladesh are likely to begin trial runs for coastal shipping in May, according to sources.

The move comes as part of the proposed agreement between the neighbours to open sea routes in order to promote bilateral trade.

India exported goods valued at over $4.7 billion to Bangladesh in 2011-12 against imports worth $498 million during the period.

As compared to a varied Indian export basket, Bangladeshi offerings are limited to agricultural commodities and readymade garments.

Currently, due to lack of direct shipping arrangements, sea trade is routed through third country ports such as Singapore or Colombo, the detour making it costlier. As a result, bulk of the trade takes place via the land route.

As per estimates, direct coastal shipping would reduce the freight cost to well below the cost of road transportation through West Bengal.

The initiative will particularly help Bangladesh's products to be more cost-competitive in the Indian market.

Both countries have already identified a number of ports to operate coastal services. While Bangladeshi services will be run from Chittagong, Mongla and Pangaon, Indian ports in the link are expected to include Paradip, Visakhapatnam and Haldia.

It has also been decided to allow plying of smaller vessels to make the service cost-effective. This would particularly benefit the riverine port of Haldia in West Bengal, which suffers due to its low draught.

According to a Union government official, the two nations have held three rounds of meetings to finalise the draft agreement. "It is not possible to run 'class' vessels (bigger ships) due to cost concerns," he said, adding that the trial run is expected to take place soon.

Further, the official said that although tariff barriers to Bangladeshi imports had recently been reduced substantially by both countries, the logjam at the Petrapole land Customs station in West Bengal continues to be a major barrier to cross-border trade. The Petrapole gateway currently handles more than half of the bilateral trade.

While the central government is enhancing capacity at the Customs station, inadequate road connectivity is proving to be a major hurdle in further expanding trade through this route.

Source : Exim News Service - KOLKATA, May 2

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