What Covid-19 taught us about the potential of rail connectivity with India

The land boundary separating India and Bangladesh is approximately 4,000 kilometres long. The cross-border trade between the two nations is facilitated by 34 Land Customs Stations (LCS), two Integrated Check Posts (ICP) and five Railway Interchange Focal Points (IFP). 

Even though there are several LCS still being used, the Benapole-Petrapole ICP handles the preponderance of overland freight movement. It is the only ground terminal that permits the import and export of nearly all commodities, with the exception of a few that are subject to customs agency restrictions. It is one of the oldest and most crowded land ports. According to the World Bank's recent study, it requires 138 hours to transfer a vehicle through the ICP from the Indian side to the Bangladesh side. 

Other LCS, including Changrabandha-Burimari, Ghojadonga-Bhomra and Mahadipur-Sonamasjid have experienced a significant rise in freight traffic in recent years. As a result, there has been a rise in awareness among stakeholders about the need to improve equipment facilities at these LCS.

There has also been a beneficial shift in the cross-border transportation of goods through the railway interchange focal stations recently. 

As most of the LCS was shut down to freight traffic due to the outbreak of Covid-19, the railroads of both Bangladesh and India worked to maintain trade relations by using the five railway interchange sites. Trade relations via railways have increased twofold compared to pre-pandemic levels. 

Apart from the plethora of goods transported by rail, three significant advances have been made in cross-border rail operations during this period. 

Until recently, bulk cargo such as gypsum, corn, limestone, fly ash, food grains and project cargo were the only cargo transported by railroads. Due to the COVID-19 pandemic's restrictions and restricted use of land ports, there was an increase in the usage of railroads to transport freight, which resulted in a diversification of goods being moved for consumption and development purposes. To meet the growing demand for fast-moving consumer goods, raw materials for industry, vehicles, automobiles and tractors, freight trains were used to deliver basic commodities such as sugar, cotton, cottonseed, spices and tractors.

Furthermore, a parcel train service was launched between Bangladesh and India in a response to the popularity of transporting goods by rail. Due to the limited carrying capacity of parcel trains, traders now have the opportunity to export smaller quantities of high-value items, including cotton yarn, fast-moving consumer goods, cotton, chemicals, textiles, fabric and other supplies for the apparel sector.

Last but not least, a container train service and automotive cargo mobility were also added. 

These actions have enabled railroads to emerge as a trustworthy option for delivering quick and secure logistics-related solutions that boost international trade between the two nations. Another aspect that has given rail a unique advantage over road for cross-border trade is that freight trains can reach much closer to their final destinations within Bangladesh than trucks, because goods carried by trucks are transshipped onto other trucks at the border.

Between 2019 and 2020, the flow of cargo between India and Bangladesh increased by more than 130% (Figure-1). The transport of goods from road to rail has also undergone a significant change in sectors such as the automotive industry. Compared to two years ago, the railway now carries the majority of car freight from India to Bangladesh. In addition, the development of container rail services has created various opportunities for transporting valuable goods.

Bangladesh was India's fourth largest export market in 2022, with exports to Bangladesh increasing significantly from US $9.6 billion in 2020-21 to $14.5 billion in 2021-22 (Department of Commerce, 2022). The positive effects of rail freight transport on the growth of reciprocal trade between the two nations have been recorded. The transition in trade flows between Bangladesh and India is depicted in Figure-2.

Prospects and consequences

In 2015, India's Ministry of External Affairs declared its "Act East" policy. India focussed on strengthening connectivity, one of the core aspects of the country's bilateral cooperation with its neighbours.

This pertains to Bangladesh and encompasses strategic measures to promote rail connectivity and cross-border trade. Meanwhile, for the South Asia Subregional Economic Cooperation (SASEC) as a whole, reducing trade costs and cross-border movement of cargoes is a must for enhancing equitably sustainable and inclusive development.

In addition to making business more accessible and fostering trade, the expansion of bilateral trade brought about by the use of rail logistics has the potential to transform the cross-border logistics landscape. There could be significant impact from the expansion of cross-border rail logistics if the trajectory persists. It would lead to a diminution in traffic congestion in the Benapole-to-Petrapole ICP, an expedited transport system lead-time and the option to reduce port bottlenecks and late shipping delivery. It would also lower transportation expenses, be more efficient in terms of energy potency and would generally be an alternative to using roads, which has problems with exorbitant charges, numerous local authorities and a lack of safety.

However, to enjoy benefits from the expanded economic advantages of rail operations, supportive additional policy initiatives will be required. These initiatives include building inland cargo facilities in Bangladesh that are rail-based and developing extra freight cargo handling capacity in the Bangladesh Railway Management System. A system has to be established where services are available round-the-clock. Private sector needs to be engaged, including both in infrastructure development and logistical management. Technology usage needs to be enhanced for trade facilitation, including streamlining customs procedures. We need mechanisms for reviewing joint applications that are unvarying, for the synchronisation of operating days or hours from both entities, mutual acceptance of inspection and maintenance, testing and certification, pooling of facilities, combined controls from both sides and implementation of single-point border control.

There is a significant possibility for both countries to economically benefit from collaborating together to interconnect their railway links in order to build cross-border logistics services. In the coming decades, business in the region might be significantly augmented by rail logistics, and it might even become a feasible option for shipments. To support the expansion of cross-border rail trade, sustained and all-encompassing efforts are required.

For this to happen, steady and comprehensive efforts are vital to facilitate the improvement of cross-border trade through rail.

Dr Munshi Muhammad Abdul Kader Jilani is an Assistant Professor of the Bangladesh Institute of Governance and Management (BIGM), Email: [email protected], and His Twitter handle is @MunshiJilani

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.