Improve trade facilitation measures in Northeast, says ADB

Guwahati: Long queues of trucks at the border, absence of automated customs, limited space at warehouses, absence of equipment like a crane or weighbridge, the lack of testing laboratories in the vicinity, limited truck parking areas, and the lack of a cargo dump yard. These are the irritants at the border gateways in different states of Northeast through which trade takes place.

“Many border crossings tend to be congested because they are located within border towns, which have either long been inhabited or have a growing local community due to increased cross-border trading activities” says an Asian Development Bank paper on “Identifying Challenges and Improving Trade Facilitation in the states of Northeast”.

All these problems have negated economic benefits for border trade in Northeast. All this is important when the Centre and state governments of Northeast are talking of giving impetus to Act East Policy. Prime Minister Narendra Modi had recently said in Shillong that the motto of the government is now ‘Act fast for northeast’ and ‘Act first for northeast”.
Statistics from Directorate General of Commercial Intelligence and Statistics (DGCIS) reveal that exports from Northeast India (`30.9 billion) accounted for only 0.13% of India’s total exports in fiscal year 2019. In addition, states of Northeast India trade far less through their own border gateways than through ports outside of the region.

The ADB paper says trade from Northeast India is still miniscule despite the Government of India recognising the Northeast as a trade gateway for India’s engagement with members of the Association of Southeast Asian Nations and other sub-regional organizations.

The paper written by two ADB officials identifies 19 priority border points among the northeastern states of Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.

Northeast India is positioned to serve the Government of India’s strategic vision encompassed in the Act East Policy. Economically, the region has large deposits of oil, natural gas, coal, and limestone, and a sizable proportion of land under cultivation for agro-horticulture products, bamboo, and rubber. The region acts as a land bridge for India’s participation in institutional forums, including the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation and the South Asia Subregional Economic Cooperation (SASEC) program.

Furthermore, access to Myanmar offers great potential to integrate India with other Association of Southeast Asian Nations (ASEAN) countries.

Among the countries with which it shares a border, most of the Northeast India’s trade is with Bangladesh, while its trade with Bhutan and Myanmar mostly occurs through border points located outside of the region.

“Limited manufacturing capacity and infrastructure inefficiency are the core reasons behind the low trade volumes of Northeast India. The Kolkata and Haldia ports of West Bengal are the primary gateways for products of Northeast via the long and circuitous Siliguri corridor. The reliance upon this route increases travel times and costs, making the region unattractive for economic activities and trade that could potentially occur through border gateways within the region” the report says.

For the northeast specifically, improved trade facilitation initiatives imply better trade connectivity between states of Northeast India and the neighboring countries of Bangladesh, Bhutan, and Myanmar. “While the current volume of border trade is relatively low, it has the potential to increase with improved transport infrastructure and enhanced economic activities. The possible use of Chattogram Port in Bangladesh as a transshipment hub for trade between the Northeast India and the rest of India, and between the North East India and Southeast Asia, further raises the trade potential of the region, thus serving the Government of India’s strategic vision embodied in the Act East Policy. Improving trade facilitation measures is a key imperative to translate the potential for increased Trade into a reality” the report says.
The paper says a majority of these Land Customs Stations(LCSs) suffer from a lack of border infrastructure, the absence of automated customs, the prevalence of non tariff measures, and incomplete transport facilitation initiatives (both within North east India and between the North east and neighboring countries).

It provides a list of hard and soft interventions needed in the northeast of India to promote trade, which includes coordinating the development of border points and transport connectivity with the partner country, prioritizing customs automation, developing laboratory infrastructure for testing and conformance, removing border restrictions, and expediting implementation of cross-border motor vehicles agreements. The paper also recommends the development of inland container depots, connecting them to select border points in the northeast of India.

Agartala has the most trade-enabling facilities, followed by Moreh, Sutarkandi, and Dawki. Most other border gateways in North east suffer from inadequate infrastructure and amenities. Key challenges related to border infrastructure include limited space at warehouses, the absence of equipment like a crane or weighbridge, the lack of testing laboratories in the vicinity, limited truck parking areas, and the lack of a cargo dump yard. At several border points, there is lack of comprehensive infrastructure facilities. For example, even if Sutarkandi or Moreh had an X-ray facility, it would not increase efficiency as the supporting infrastructure of 24-hour electricity supply is not available.

Besides infrastructure amenities, the study’s field visits found that the identified border points suffer from poor traffic management. There are often long queues of trucks at the border, causing delays in clearance and border transit. These issues arise due to the absence of systematic planning for border locations and facilities design. Many border crossings tend to be congested because they are located within border towns, which have either long been inhabited or have a growing local community due to increased cross-border trading activities.

“Most of these border towns of North east situated in largely rural regions with agriculture as the mainstay of the local economy, have limited urban infrastructure and hardly any cross-border trade infrastructure. This results in poorly coordinated activities that negate the direct economic benefits of their location” the paper said.

Citing an instance it said Dawki is a rural settlement with a population of around 500. It is one of the eight functional border points in Meghalaya linking with the Tamabil land port in Bangladesh. It offers a rare opportunity for planned cross-border urban development. Dawki is already a commercial border crossing with an estimated daily flow of 500 trucks and 1,000–1,500 tourists via the Dawki LCS.

“As Dawki is still classified as a village, basic services such as water supply, sanitation, and transportation are developed and managed by the respective state government line agencies, which currently face resource constraints. With no industrial activity in the region, economic activity is dominated by agriculture, with 75% of the population dependent on it, while the remaining population is engaged in tourism-linked activities, administrative jobs, and small retail shops and local trading. Already a bustling place, Dawki is on the verge of uncoordinated urban development, if timely planned investments are not made in the region” the paper said.

The paper said every kind of infrastructure, including that which supports basic municipal services and economic activities, requires land, 80% of which is community-owned in Dawki thereby making its acquisition a complex deal.” This has had direct implications for planned development and delivery of basic services—water supply, sanitation, and drainage. As a result, infrastructure for the locals and along the roads leading to the LCS is poor” it said.

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