Transshipment of Indian goods: 4 more trial runs on cards

India wants to start using the Chattogram and Mongla ports permanently as soon as possible, with the relevant fees, including escort charges, fixed for the trial run kept unchanged. But, Bangladesh wants to open the two ports for permanent use by India after conducting more trial runs and raising the escort charge on the basis of the experience of the trial runs.

Against this backdrop, the two countries have agreed to operate four trial runs on the Mongla-Tamabil and Chattogram-Tamabil routes, and between Sheola and Bibirbazar in India, and Mongla and Chattogram ports in Bangladesh from this December.

India did not, however, agree to Bangladesh's proposal to increase various charges and fees, including escort charges, according to the minutes of a meeting of the Bangladesh-India Joint Working Group of Customs (JGC) held in Dhaka on 22-23 March this year.

Md Shahidul Islam, member (Customs: Audit Modernisation and International Trade) of the National Board of Revenue, led the Bangladeshi delegation at the meeting while the special secretary to the Indian government and member of the Central Board of Indirect Taxes and Customs led the Indian side.

The two countries signed a memorandum of understanding (MoU) in 2015 that allowed the movement of goods to and from India using Chattogram and Mongla ports.

A standard operating procedure (SOP) for this was signed in 2019 during Prime Minister Sheikh Hasina's visit to India. The following year, in the first trial run, India carried goods to Agartala by road from Chattogram port via Akhaura.

Earlier, Bangladesh temporarily fixed the escort fee from Chattogram port to Tripura at Tk50 per tonne of goods, the document processing fee at Tk30 per consignment, and the container scanning fee at Tk254 per container.

At the latest JGC meeting, India requested Bangladesh to allow the transshipment of Indian goods with regular port use keeping these fees and charges unchanged. Raising the fees could not be a precondition for the implementation of the agreement, they argued, adding the issue of raising fees can be discussed later in the appropriate forum.

The Bangladesh side, however, told the meeting, "The experience of the first trial run and the inputs from the internal consultation demonstrate that the issue of comprehensive customs procedure, detailing of fees and charges, appointment of transit operator, infrastructure, and technical readiness of land customs stations at both sides are essential for the notification of a regular Standing Order."

Despite having provisions of monetary guarantee in the General Agreement on Tariffs and Trade (GATT) and Trade Facilitation Agreement (TFA), Bangladesh has facilitated the Agreement on the Use of Chattogram and Mongla Port against the undertaking.

"However, the escort charge mentioned in the temporary standing order is much lower than the charge that is applicable for a domestic escort charge and is much more favourable than national treatment, which needs to be aligned with Article V(3) of GATT and Article 11(2) of TFA," the Bangladesh side added.

The number of days required, the halt time, the required customs procedures, and other important aspects of transit through the agreed routes are not known as there were no train services in operation on those routes, pointed out the Bangladeshi delegation, adding, "Therefore, at least one trial run to and from India is required for each of the approved routes and the findings of those trial runs will be accommodated in the permanent standing order. The information will also be helpful for the ASYCUDA-based transit module in the future."

Dhaka's objections regarding new customs rules unheeded

The Bangladesh delegation at the JGC meeting said exporters in the country have been facing obstacles since the issuance of the Customs (Administration of Rules of Origin under Trade Agreements) Rules (CAROTAR) by India in 2020. This violates the Safta agreement, they noted, adding that Bangladesh had requested India not to apply these new rules on exports from Bangladesh, but India did not pay heed to the request.

The Bangladesh side informed the meeting that according to information from the Federation of Bangladesh Chamber of Commerce and Industry and the India-Bangladesh Chamber of Commerce and Industry, some exporters are facing the problem of physical verification, as the Indian side is releasing goods by collecting bank guarantees in some ports in Gujarat and Maharashtra.

As a result, it takes around 7-8 months to verify the Country of Origin (CoO) certificate and, for this reason, Indian importers become reluctant to trade with Bangladesh, they continued.

In reply, the Indian side said since September 2020, only 69 cases have been referred for retroactive checks, which is minuscule when compared to about 35,000 Bills of Entry filed in a year for imports from Bangladesh under the Safta.

The Bangladesh side also said there are inconsistencies among various provisions of the new customs rules and the Safta Rules of Origin, which is creating trade barriers between Bangladesh and India.

Corresponding to the decision of the Bangladesh-India Commerce secretary-level meeting held on 7-8 March 2021, the Bangladesh side sent a detailed communication referring to the issues and requesting the withdrawal of CAROTAR 2020, through diplomatic channels in November last year and raised the issue again at the last commerce secretary-level meeting.

At the latest JGC meeting, Bangladesh once again requested India not to apply CAROTAR on Bangladesh's exports under Safta.

Land customs stations development issues

The Bangladesh side at the JGC meeting said Bangladesh as an LDC enjoys duty-free tariff preference access for all export items except 25 consisting of alcoholic and tobacco products since 2012. But, unfortunately, exports to India could not reach the desired level even after getting duty free access to the market. In fact, the trade balance is highly in favour of India, they added.

"Bangladeshi exporters are facing challenges in some Land Customs Stations (LCSs) due to infrastructure constraints on the Indian side."

At the JGC meeting, Bangladesh sought a declaration of land routes at Radhikapur (Birol), Haldiabari (Chilahati), and Gede (Darshana) LCSs, but the Indian side said the infrastructure at these LCSs as well as the connecting road infrastructure on the Indian side need to be developed, which will involve multiple agencies. The trade potential is also required to be assessed, they said.

With regard to Radhikapur, India said the nearest national highway from Radhikapur is 40 kilometres away. The initial 15km stretch is a narrow single road with certain sections of it being mud roads.  About Haldiabari and Gede, they said narrow roads pass through agricultural lands up to zero point and that the present infrastructure is inadequate for the movement of goods carrying vehicles.  

The Bangladesh side sought a new gate at Petrapole for Bangladeshi export trucks returning from India. Currently, only two gates are active between Benapole and Petrapole land ports. One of the gates is used for passenger movement and the return of empty trucks to India, while the second gate is used for importing cargo from India by one side of the road and the other side of the road is used for entry and exit of Bangladeshi export cargo.

A single road is used for both import and export cargoes, which often creates congestion, especially in the case of vehicle breakdowns midway, bringing cargo movement to a halt, the Bangladesh side pointed out. In response, the Indian side said a second cargo gate is under development at Petrapole, which will address the issue.  

The Bangladeshi delegation stated that it has been observed in recent years that Petrapole-bound trucks have to wait in a long queue at Kalitala under the Bongaon municipality. The parking-related cost is also high, they mentioned, adding only 350-450 trucks are allowed to enter Bangladesh despite having a larger capacity for handling trucks. This increases the time and cost for the importers of Bangladesh.

The Indian side informed the meeting that the local authorities concerned are taking measures to streamline parking.  

Meanwhile, the National Board of Revenue has conducted a physical survey at different LCSs by a very high level team headed by an NBR member to assess the existing infrastructure facilities. The survey found that only 9 LCSs namely Benapole, Akhaura, Bibirbazar, Banglabandha, Sheola, Sonahat, Nakugaon, Bholaganj and Darsana have comparatively satisfactory facilities, whereas there is inadequate infrastructure for loading and unloading space, parking yard, warehouse and shed in 21 LCSs on the Indian side.

The other LCSs, including Sonamasjid, Bhomra, Hili, and Burimari, do not have any specific loading and unloading point, yard, shed and warehouse on the Indian side, although those are on the list of 16 priority LCSs. As a result, Bangladeshi export trucks have to unload goods in open or private places till customs formalities are completed, causing damage to the goods and financial losses to exporters.

At the meeting, Bangladesh also said the existing one-way roads are very narrow in Hilli, Mahadipur, and Ghojadanga on the Indian side, causing traffic congestion. In order to solve the problem, the access road from the zero point up to the nearest highway on the Indian side is required to be widened.  

The Indian side, however, informed the meeting that LCSs are shortlisted for development in phases by the Land Port Authority of India (LPAI) and regarding the road widening they said that it will take up the matter with relevant stakeholders.

The Bangladesh side also informed that Agartala is one of the most important LCSs for Bangladesh's export trade with India, but it has a shortage of space at the warehouse on the Indian side. Instances of not being able to accommodate export trucks at Agartala due to space constraints have been reported by the exporters of Bangladesh, causing 3-7 days of delay.  

But the Indian side refuted the claim saying there are adequate warehousing facilities in the context of the trade at the location.

Mentioning that readymade garments are the key exportable item for Bangladesh, the Bangladeshi delegation said some exporters tried to export RMG through Dawki, but they faced challenges due to the unavailability of chemical testing facilities. In this context, Bangladesh requested the establishment of testing facilities near Dawki. The Indian side said they would convey the request to the relevant authorities.   

Train freight

At the JGC meeting, Bangladesh said during the covid-19 pandemic, import-export trade using the rail routes between Bangladesh and India saw a significant increase.

Returning empty containers (to and from) could be used for the transportation of export goods from the other country, they suggested, adding, "This might be beneficial for the stakeholders of both sides, resulting in a reduction of trade costs."

As such, the Bangladesh side laid emphasis on facilitating exports of Bangladeshi cargo in the returning empty wagons of the Indian Railway.

The Indian delegation said India has been considering this. The pre-condition testing of modules in the Indian Customs EDI system has been initiated and its completion is expected shortly, which would enable further steps to be taken for operationalisation.