Seamless transport will hugely benefit India-Bangladesh: World Bank report

Seamless transport connectivity between India and Bangladesh will not only have huge economic benefits but also has the potential to increase India's national income by 8% and that of Bangladesh by 17%, says a new World Bank report.

The report, titled Connectivity to Thrive: Challenges and Opportunities of Transport Integration in Eastern South Asia said Northeastern states, West Bengal and even states like Uttar Pradesh and Maharastra will have huge economic benefits from seamless connectivity.

The report was released on Tuesday and comes days before Prime Minister Narendra Modi's visit to Bangladesh on March 26.

At present, Indian trucks are not allowed to transit through Bangladesh.

As a result, the northeast of India is particularly isolated from the rest of the country and connected only through the 27-km-wide Siliguri corridor, also called the “chicken’s neck”. This leads to long and costly routes.

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Goods from Agartala, for example, travel 1,600 km through the Siliguri corridor to reach Kolkata Port instead of 450 km through Bangladesh. If the border were open to Indian trucks, goods from Agartala would have to travel just 200 km to the Chattogram Port in Bangladesh, and the transport costs to the port would be 80% lower, said the report.

According to the report, all districts in Bangladesh would benefit from integration, with the eastern districts enjoying larger gains in real income.

States bordering Bangladesh such as Assam, Meghalaya, Mizoram, and Tripura in the northeast, and West Bengal on the west, and states further away from Bangladesh such as Uttar Pradesh and Maharashtra would also gain huge economic benefits from seamless connectivity.

The report said to unleash the full potential of integration, the countries need to address the challenges such as infrastructure deficits, particularly in designated border posts, harmonization of regulations and customs procedures, the report says.

Junaid Ahmad, World Bank country director in India, said the eastern sub-region is poised to become an economic growth pole for South Asia.

"An important component of this development potential is for countries to invest in connectivity – rail, inland waterways, and roads,” he said.

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“This is especially true as the region begins its economic recovery from the Covid-19 pandemic. Ultimately, connectivity offers the promise of long-term sustainable and inclusive growth.”

The report said previous analysis indicated that Bangladesh’s exports to India could increase by 182% and India’s exports to Bangladesh by 126% if the countries signed a free trade agreement. This analysis found that improving transport connectivity between the two countries could increase exports even further, yielding a 297% increase in Bangladesh’s exports to India and a 172% increase in India’s exports to Bangladesh, the report said.

"Geographically, Bangladesh’s location makes it a strategic gateway to India, Nepal, Bhutan, and other East Asian countries. Bangladesh can also become an economic powerhouse by improving regional trade, transit and logistics networks,” said Mercy Tembon, World Bank country director for Bangladesh and Bhutan.