India Bangladesh: Standard Operating Procedure Agreement

As of now, the bulk of India Bangladesh trade takes place across the land border, and to the extent that we have sea trade this is done through distant ports. The present connectivity through sea route with Bangladesh is through ports of Colombo and Singapore.  The goods are taken to distant ports and then they are reloaded into feeder vessels which then bring them into Chittagong. The long sea route adds significantly to the transportation costs of EXIM trade. Moreover there is no significant cargo movement between sea ports of Bangladesh and India as it is not profitable for the big vessels to operate between these sea ports.  Under such circumstances, there is a need for smaller ships to provide direct connectivity between the eastern sea ports of India, Chittagong and other ports in Bangladesh. This, besides improving the connectivity would also provide competitive freight rates.

Standard Operating Procedure Agreement

SOP was signed to operationalise the Agreement on Coastal Shipping which was signed between the two countries in June, 2015. What this Coastal Shipping Agreement would do is basically enable the direct regular movement of ships between India and Bangladesh, which would bring the shipping time down from 30 to 40 days on average to seven to 10 days.

Advantages of the Agreement
Connectivity To North East

The opening of coastal shipping between India and Bangladesh would enable the movement of cargo to the North East through coastal shipping upto Chittagong and thereafter by road/inland waterways.

Hub Ports

The deep draft ports on the eastern coast of India can be ‘hub ports’ for the onward transportation of cargo to Bangladesh via the coastal mode through RSV category of vessels.

Increase In Trade

The Indian ports will attract enhanced cargo and also the overall transportation cost to Bangladesh will get reduced. This will enhance mutual trade.

Transshipment Ports

The Indian ports serving as trans- shipment ports for Bangladesh cargo will derive benefits by way of enhanced throughput as a result of Indo-Bangladesh coastal trade.

Integration With Other Countries

Coastal shipping is the key sector for kick starting the concept of BBIN (Bangladesh, Bhutan, India and Nepal) a sub-regional developmental approach within the eight-nation SAARC (South Asian Association for Regional Cooperation). The agreement will allow Bangladesh access through India to Nepal and Bhutan and vice versa. Therefore two other important and contiguous neighbours of India, namely Bhutan and Nepal, will also start reaping the fruits of development and connectivity. This Improved connectivity will enhance mutual trade which in turn will bring a new spurt of growth to the entire region and a new vigour to India’s trade ties in the immediate neighbourhood.

Therefore from long term perspective this is a sector which will not only boost bilateral trade, economic cooperation and people-to-people contacts between India and Bangladesh, but also take this process beyond the shores of India and Bangladesh and integrate Bhutan and Nepal also in the India-Bangladesh growth story.