Infrastructural Bottlenecks Choking Trade Revival in South Asia
India shouldn’t underestimate the value of trade corridors with its neighbours, write Afaq Hussain and Riya Sinha
For many years now, South Asia has earned the infamous reputation of being ‘the least integrated region in the world.’ The South Asian Association for Regional Cooperation (SAARC) was formed primarily with the vision of regional economic integration, following on the models of European Union and ASEAN. However, 30 years after its inception, which includes a legacy of trade agreements like South Asian Preferential Trade Agreement (SAPTA) and South Asian Free Trade Agreement (SAFTA), the region continues to be marred by low regional economic integration.
Connectivity has an important role to play here. Transaction costs of trading in South Asia continue to be high thus hindering trade. It is important to strengthen regional connectivity and trade facilitation which could support regional economic integration. The focus of connectivity is even evident in some of the recent initiatives either under the ambit of SAARC or sub-regional in nature such as the Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement (June 2015), a proposed BBIN Railway Agreement (January 2016) and signing of SOP on India-Bangladesh Coastal Shipping Agreement (November 2015).
The bigger question here is whether these new initiatives, as promising as they look, would foster the development of an efficient economic corridor in South Asia to boost intra-regional trade.
Improving Efficiency of Economic Corridor
Transport and economic activity are the two primary pre-requisites for an economic corridor. To ensure efficiency, this needs to be complimented with a world-class infrastructure, and removing various tariff and non-tariff barriers.
The Wagah-Attari Integrated Check Post (ICP), the first Indian ICP operational since 2012, is the only land route allowed for international trade between India and Pakistan. With state-of-the-art facilities, the ICP was built with a view to facilitate a surge in trade and travel between India and Pakistan. Additionally, with the Pakistan-Afghanistan FTA, this route was also meant to cater to goods coming in from Afghanistan. However, over the years, the surge in trade has not been significant.
Political issues aside, certain key infrastructural and operational matters have continued to plague trade via the ICP. Dearth of adequate cargo handling and monitoring equipment, lack of testing lab facilities, issues related to storage areas such as water-logged cement storage yard and inadequate number of X-ray machines in warehouses, labour concerns, ambiguities over truck movement, inflated demurrage payments by traders and lack of co-ordination between governing authorities have been some of the key issues. Given that this ICP is to act as a model for developing other ICPs in India, it is imperative that these issues are addressed.
Apathy of the ‘Wagah of East’
On the eastern side of India, the Petrapole-Benapole Land Customs Station (LCS) is the busiest land port between India and Bangladesh, accounting for 65 percent of bilateral trade and travel, making it an important port for the BBIN Motor Vehicle Agreement. The daily number of export trucks from India to Bangladesh is approximately 300. Additionally, a handful of empty trucks need to go to the zero-line to trans-load Bangladesh goods into Indian trucks.
This number sometimes goes up to 1,100 trucks per day. Given the traffic, a range of infrastructural and operational challenges are faced at the LCS. These revolve around issues related to logistics such as limited parking space at the Central Warehousing Commission (CWC) leading to congestion and birth of illegal parking facilities, regular congestion at the approach road, and other issues like frequent failure of the Customs’ EDI (Electronic Data Interchange) system, lack of testing labs, and frequent breakdown of hardware. Operational impediments related to manual trans-loading and incoherence of working hours, are also evident at the LCS. An ICP at Petrapole was scheduled to be inaugurated in August 2015, but has missed several deadlines.
Weeding out Infrastructure Issues
At the Wagah-Attari ICP, this could include undertaking measures for infrastructural modernisation such as resolving the issue of water-logging at the open storage yard through installation of drainage facility or cementing the ground, installation of necessary equipment and systems such as cranes, X-ray machines, full body truck scanners and better CCTV cameras. The Land Ports Authority of India (LPAI) has to ensure that a representative is present at the Attari-Wagah ICP to avoid any communication gap between the local authorities and the government in New Delhi.
At the Petrapole-Benapole LCS, the most urgent need is inauguration of the ICP. It would address the most pertinent woes of the port -- easing congestion and increasing parking space. The government also needs to implement innovative ways to decongest the connecting road, lined with heavy settlements and trees of ecological importance, such as construction of flyovers or opening of alternate routes.
Other reforms needed include installation of provision for storing perishable products that require sampling, complementing the EDI system with better network facilities, introduction of more staff at the EDI service centres to ensure timely and efficient filing of documents and dispersal of essential information.
In order to encourage integration in South Asia, a comprehensive approach is needed to address the infrastructure issues, specially at the land ports, information and communication technology, as well as behind the border issues including cross-border transit facilitation measures; customs clearance, and other facilitating polices and regulations.
(Afaq Hussain is Director and Riya Sinha is Research Assistant at Bureau of Research on Industry and Economic Fundamentals (BRIEF), New Delhi)
(This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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