New Delhi, India (BBN)-India could consider unilaterally allowing vehicles from Bangladesh to ply within the country in a bid to facilitate cross-border trade by reducing transaction costs.
The commerce department plans to push on priority under the new government a cabinet note in this regard that seeks to allow entry of motor vehicles from Bangladesh for at least five years and thereafter depending on the response of the neighbouring country, reports The Economic Times.
"Once the (new) minister is here, we will move a cabinet note to unilaterally allow motor vehicles from Bangladesh into the Indian territory, which will lead to significant reduction in transaction costs for imports and exports," said a commerce department official.
The plan assumes significance since the Prime Ministerdesignate Narendra Modi has been vocal about improving ties with the neighbouring countries and has invited heads of SAARC countries to his swearing-in ceremony on Monday.
The ministry of road transport and highways, which will be in charge of framing the rules and protocol, has approved the proposal only conditionally, though, saying there must be clarity on whether unilateral access would translate into a bilateral agreement.
"Yes, ideally Bangladesh should also give access to our vehicles.
But considering the highways ministry's concerns, we will propose that in case access has to be given for a limited time, it should be for at least five years, after which it can be reviewed. Else, it will not serve the purpose," said the official, who did not wish to be named.
India and Bangladesh had earlier come close to signing a bilateral Motor Vehicles Agreement (MVA), which would have enabled vehicles from both sides to enter and ply within the other's territory.
The two countries had agreed to work towards concluding the MVA when Prime Minister Manmohan Singh visited Bangladesh in 2011 and held talks with his counterpart Sheikh Hasina.
However, Bangladesh has not responded to the draft MVA till date, prompting the Indian side to act on it unilaterally.
"This will keep the region better integrated. We will float the cabinet note after discussing it with the minister," the official added. At present, cargo vehicles from both sides are required to unload at the check posts.
The goods are then transferred and carried into the respective countries.
Combined with the rapid growth in bilateral trade, which has crossed $5 billion, the requirement has led to massive congestion at the border, especially at the land custom stations and integrated check posts.
This, in turn, has led to a significant increase in trade transaction and freight costs, impacting both exporters and importers.
"It will be a very good gesture from India's side, which will give confidence to Bangladesh to reciprocate it as they get more access to the Indian market.
This will help in reducing transaction cost as well," said Ram Upendra Das of Research and Information System for developing countries.
This is not the first time India could propose unilateral support to a lesser developed country.
Under the South Asian Free Trade Area (Safta) agreement, India had reduced its sensitive list from 868 to 614 products, on which tariff concessions will not apply to Bangladesh. India provides a dutyfree quota free access to all items barring just 25 products.
Bangladesh Prime Minister Sheikh Hasina will miss Modi's swearing-in ceremony.
However, she has deputed parliament speaker Shirin Sharmin Chaudhury to represent the country.
BBN/ANS/AS-26May14-11:00am (BST)