Dhaka looks to unlock export potential through Rail to India
Highlights:
- Bangladesh has 9 rail interchange points with India, 5 are operational
- Both countries keen to take advantage of low-cost and secure export opportunities by railways
- Imports by rail increase amid pandemic
- Indian importers less interested in using rail freight because of non-availability of importable goods
Container train service between Bangladesh and India started gaining ground during the pandemic, prompting the government to look for ways to reactivate the cross-border railway links to facilitate bilateral trade as well as connect two other neighbours – Bhutan and Nepal.
As part of this, the Ministry of Commerce has had a report prepared by the Bangladesh Deputy High Commission in Kolkata, on the current situation of the existing nine interchange railway points with India
According to the report, goods are regularly imported from India on four out of the five currently active interchange routes, but the freight trains from India go back empty.
If storage yards with customs control facilities are constructed in the Bangladesh part of these interchange points, Bangladesh will be able to export products to India by rail. Besides, it is possible to build a strong transit system by connecting Chattogram and Mongla seaports with Nepal and Bhutan using the interchanges, the report further states.
With the construction of a dedicated railway bridge across the River Jamuna, parallel to the existing Bangabandhu Bridge, freight trains will be able to operate directly from Dhaka and Chattogram to India. Then import-export by rail is expected to increase further, expect officials at the commerce ministry.
The five operational interchange railway points between Bangladesh and India are at Darshana (Bangladesh)-Gede (India), Benapole (Bangladesh)-Petrapole (India), Rohanpur (Bangladesh)-Singhabad (India), Birol (Bangladesh)-Radhikapur (India), and Chilahati (BD) Haldibari (India).
Among them, Darshana-Gede is identified as Trans-Asian Railway (TAR) Route-1, while Rohanpur-Singabad as TAR Route-2.
As part of the two countries' continuous efforts to improve railway connectivity and boost bilateral trade, the Akhaura-Agartala railway link project is being implemented. The two countries are now working on formulating a development project proposal for establishing Panchagarh-Siliguri rail link after the completion of the feasibility study.
The two countries are also planning to reopen the Burimari-Chengrabandha, Mogolhat-Gitaldaha and Feni-Belonia rail interchanges.
Imports by rail get momentum, exports remain zero
Although Bangladesh's roughly $10 billion annual imports from India are predominantly delivered by trucks, rail freight started getting momentum during the pandemic.
Of the five rail routes operational now, the Darshana point accounts for the highest amount of shipment of goods imported by rail freights, followed by Benapole.
In its report sent to the commerce ministry on 6 December this year, the deputy high commission said 53 lakh tonnes of Indian goods worth around Tk4,000 crore had been imported through Darshana-Gede and Benapole-Petrapole interchanges in Chuadanga in the 2020-2021 fiscal year.
Besides, a significant amount of goods – 1.5 rakes – is imported from India every day through the Rohanpur-Singabad and Biral-Radhikapur interchanges.
In FY20, 1.84 lakh tonnes of goods were imported from India through Benapole rail route, which increased to 5.40 lakh tonnes in the following year amid the pandemic, says the deputy high commission.
But containers return to India empty, even though Bangladesh's overall exports to India have crossed $1billion. Trade facilitators and officials say Indian traders are less interested in using rail freight due to non-availability of importable goods.
SM Sarafat Hossain, assistant commissioner of Darshana customs station in Chuadanga, said at one time, molasses used to be exported India in freight wagons from Bangladesh but the item has not been exported since 2010.
Mir Md Liaquat Hossain, superintendent of Darshana International Railway Station, said stones, wheat, maize and rice regularly come to Bangladesh from India by freight wagons but Indian traders are not interested as there are no goods to go to India by freight wagons from Bangladesh.
The Darshana customs station earned about Tk50 crore in the first five months of the current financial year. Revenue has started to increase in line with an increase in import of goods following the pandemic.
Efforts on to unlock potential
Commerce ministry officials told The Business Standard that one of the aims of the government is to increase export opportunities by rail to increase competitiveness.
Both countries are keen to take advantage of low-cost and secure export opportunities by railways. In addition, closed routes need to be revived for building the Trans-Asian Railway network.
The commerce secretary-level meeting slated for the second week of January in New Delhi will discuss ways to increase imports and exports using the railway. But, it is the Ministry of Railways that will finalise everything about the launch of freight trains.
At a secretary-level meeting in Dhaka last March, Bangladesh proposed to export goods on the Darshana-Gede rail route.
An official at the commerce ministry said they would write a letter to the railways ministry to construct storage yards at the interchange points as per the recommendations of the deputy high commission.
The commerce ministry has been planning for three years to export goods to India using the Darshan-Gede rail route, he said, adding the National Board of Revenue formed a committee in 2018 to identify the infrastructure required for export through this port and the committee has sent recommendations to the railways ministry for construction of storage yards with customs control.
Commerce Minister Tipu Munshi told TBS that steps have been taken to increase import-export of goods with India and boost trade of goods with Nepal and Bhutan using railways.
He said the government is also trying to find out how Bangladesh can benefit economically through regional connectivity using these routes.
Asked if the railway ministry has taken any initiative to build necessary infrastructure, including storage yards, to increase imports and exports of goods through the interchange points with India, Railways Minister Nurul Islam Sujan declined to comment.
Md Shahiduzzaman, station master of Benapole railway station, said at present goods are imported from India through Benapole port as well as by land. However, as there is no railway yard in the port, storing goods has become problematic.
He, however, said the authorities have taken initiatives to address the issue.
"Construction work on two railway yards at the port has already started. Work is underway to extend the broad gauge line from Benapole to Petrapole. Once these projects are completed, trade will increase further. Export can start if exporters want."
Traders favour rail freights
In July 2020, Bangladesh and India launched a new cargo train route, more than two years after a trial run was made.
A container train takes three-and-a-half hours to reach Benapole from Kolkata, while a truck has to wait for 12 hours or more to cross the border.
Bangladeshi traders also are interested in exporting and importing goods by rail instead of trucks.
At present, knitwear manufacturers can only import yarn through the Benapole-Petrapole rail route. They have written to the NBR seeking permission to import through other interchanges including Darshana, said Md Hatem, senior vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Aminul Haque, vice-president of the import-export association at Benapole Port, told TBS that Bangladeshi traders were held hostage by Indian truck parking syndicate on the Bongaon-Kolkata route in export-import by road. "They [the syndicate] used to collect Tk10,000-15,000 per truck in the name of giving schedules to run by creating various obstacles. Their oppression aggravated at the beginning of the Covid outbreak, which caused import costs to go up, affecting the domestic market. In view of this, the government has allowed the import and trade of all types of goods by rail since June 4 last year."
Day by day traders have become more inclined to transporting goods by railways as it is cost-effective and secure, he said, adding earlier, goods were imported in 4 to 5 wagons per month but now different types of goods are being imported daily through cargo rails, and parcel vans. As a result, the government also is getting more revenue.
"But we want to see exports by railways. Both the business community and the government need to come forward to this end."
Mofizur Rahman Sajan, president of Benapole C&F Agents Association, said Bangladeshi traders, who had been held hostage by the illegal Indian truck parking syndicates for almost two decades, are now almost free of their clutches. They now import all kinds of products by rail. If exports start this way, they will benefit.
Benapole Customs Commissioner Md Azizur Rahman said the beginning of imports from India through container trains has opened up a new scope for the expansion of bilateral trade, which is saving time and reducing costs as well as increasing security.
If goods come from India through land ports as well as by rail, the country's railway sector will also develop, he also said, adding, "We are also considering exporting goods to India by rail."