CHAMBER Breakthrough in India-Bangladesh Coop in Energy, Infra & Logistics

The recent visit of Prime Minister Narendra Modi to Bangladesh is hailed as the first concrete step towards India’s ‘Look East Policy’. Undeniably, the visit has resulted in first step towards concrete action from the earlier postures characterized by rhetoric. A string of agreements, mostly in economic and business domains have been inked between the two countries. The response from the Bangladesh is equally enthusiastic and positive.  
In the recent past, Bangladesh has emerged as India’s largest trading partner in South Asia so much so that the latter has started asking with sound reasons why India’s neighborhood policy is centered or obsessed with Pakistan and China. It is time for the two countries to script a change in the bilateral economic relations and indeed first conscious effort has been initiated in that direction.
Neighborhood cooperation has a few distinct advantages. First, benefit of cooperation stems from logistics advantage to both the countries. For a country like India with continental size and depth, each region is spread with thousands of kilometers.  Often, logistics of the neighboring country will be more economical for moving its cargo in international trade.  In this context, it is more relevant between eastern region of India and Bangladesh because of the geographical proximity.Obviously, the cargo movement between the sea ports of Bangladesh and India is beneficial for both countries to bring down the transaction cost. But that movement is insignificant as it is not profitable for the big ocean going vessels to operate between the ports of the two countries. Specially tailored vessels  known as River Sea Vessel (RSV) has been prescribed for coastal shipping which has significant lower operational costs without compromising on safety. 
Besides reducing the freight cost, these services will also improve the utilization of port capacities of India and Bangladesh. Indian merchant vessels can now use the two ports- Chittagong and Mongla– to directly ship cargo to Bangladesh, instead of routing the shipments through ports such as Singapore. This will bring shipping time down to a week or less and will open up new opportunities for trade between the two countries and also with third countries.Another advantage is the decongestant of roads especially at the land custom stations/integrated check posts at the Indo-Bangladesh border.  Importantly, it is also agreed that both nations will extend the other country’s vessels the same national status given to its vessels  for international sea transportation.
Also a separate memorandum of understanding on “Blue economy and maritime cooperation in the Bay of Bengal and the Indian Ocean” will boost cooperation in regional waters. India and Bangladesh also renewed a protocol on inland water transit and trade and signed two agreements for starting trans-border bus services on the Dhaka-Shillong-Guwahati and Kolkata-Dhaka-Agartala routes. This will primarily benefit tourists and residents of India’s landlocked northeastern states by cutting down travel time. Other prominent agreements in the logistics and communication fields are-cooperation in the field of quality and standardization for making goods and services more tradable and acceptable between both countries.
For a long time, there has been an intense talk between the two countries to engage themselves in achieving energy security. Bangladesh has huge reserves of gas which can be tapped for developing industrial hubs in the eastern region of India. This region is generally starved of power resulting in lackluster industrial development. The energy dialogue agreed upon by the two countries will pay dividend because the political, economic and traditional ties between the two countries which infect  have been improving faster than ever before in view of the proliferation of entrepreneurship and private sector initiatives in Bangladesh.
The agreement also provided for partnership between the two countries in energy segments like renewable energy, civil use of nuclear energy, particularly in training the personnel and in tapping conventional   energy sources. Given the advantage of geographical proximity, Bangladesh can sell surplus power to India. It is significant to note that another MoU allowed Indian firms to set up economic zones in Bangladesh. It is for the first time, a neighboring country has allowed such zones exclusively for Indian firms.  The move is aimed at encouraging Indian investments in Bangladesh. Equally significant is India offering a line of credit of US$ 2 billion to Bangladesh which is aimed at promoting the bilateral trade.
The ratification of the four decade old Land Boundary Agreement (LBA) is yet another major takeaway. This will allow the two sides to swap more than 160 tiny enclaves whose residents were virtually stateless subjects living in poor conditions. These enclaves are like islands of foreign territory inside each country. Once the LBA is implemented, each country will take over the enclaves in its territory and more than 50,000 residents will have the option to choose their nationality.