India can increase inter-regional trade with its neighbouring countries threefold by making its borders superfluid for the seamless movement of logistics, goods and tourists, World Bank Country Director for India Auguste Tano Kouame has said.
He was speaking to The Times of India on Friday on the sidelines of a brainstorming session, titled “Unlocking Economic Opportunities for Northeast States”, organized by the World Bank and the Assam government.
Kouame said impediments in the full implementation of the Motor Vehicles Agreement (MVA) 2015 signed and ratified by India, Bangladesh and Nepal must be removed to ensure smooth movement, something which was agreed upon by high-level officials and delegates.
Delegates noted with concern that the agreement had yet to become effective — eight years after the MVA framework agreement was signed in 2015 — and called for its early implementation.
“The MVA is an important step towards this direction and can bring increased economic opportunities to rural communities in the Northeast,” Kouame told The Times of India.
If India had greater trade with Bangladesh and other countries, based on India's natural and economic environment, its trade level would be three times higher, he said, adding that the Northeast would reap even more benefits.
The WB official said full implementation of MVA alone could help the Northeast grow by reducing inequality in the region. “Especially rural people and women can benefit immensely.”
According to the World Bank report “Connecting to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia”, the real income of the northeastern states can increase by 5-15% if transport routes between India and Bangladesh are fully integrated by implementing the MVA.
The World Bank estimates that under the MVA, goods being transported from Agartala in Tripura to Kolkata in West Bengal can experience a 65% reduction in time and a 68% reduction in cost under the MVA.
Once restrictions on the movement of Indian cargo trucks through Bangladesh are lifted, the Guwahati to Chittagong road route will become more popular as it is about 40% faster and cheaper than the current Guwahati to Kolkata route through the Siliguri corridor, reads the World Bank report.
Currently, high tariffs, trade barriers and inefficient border procedures in the region discourage intra-regional trading among South Asia's eight nations, it adds.
The report found that it is faster and cheaper for a firm in India to trade with a company in Brazil or Germany than with a company next door in Bangladesh.
The report also estimated that efficient implementation of the MVA can lead to an increase in the national income for India by 7.6% and for Bangladesh by 16.6%.
Cecile Fruman, the World Bank's director for regional integration and engagement for South Asia, said easier customs procedures, if initiated, could be instrumental in boosting trade between India and its neighbours.
Reducing the burden in terms of transactions and documents could be key along with improvement of transit routes infrastructure, she said.
“Northeast India faces severe connectivity challenges, as trade routes through Bangladesh are virtually non-existent,” said Fruman, adding the limited trade routes between India and Bangladesh through the Northeast were not closed but it was challenging to move goods.
“Still, at the international border, goods need to be shifted physically from one truck to another. It's time-consuming and hampering business, especially of perishable goods,” she added.
The Northeast, and in particular the states that shared a border with Bangladesh, could be the biggest beneficiary of the MVA, through enhanced regional trade, output, employment and improved living standards, Fruman said.
She said Bangladesh was keen to purchase agriculture and horticulture products from the Northeast and also services.
“Bangladesh can give a new dimension to tourism in the Northeast, including medical tourism,” she added
