India Narrative, May 1, 2022
By Yatika Agrawal and Swati Verma
In the financial year 2021-22, India achieved a milestone of crossing $ 1 trillion worth of trade. Our land ports have played a major role for this achievement.
Land ports are increasingly showing their importance in India’s trade with neighbouring countries. This is evident from an increase in the value of land-based trade from Rs 327.46 billion (approximately $ 4.37 billion) in 2012-13 to Rs 954.89 billion (approximately $ 12.73 billion) in 2020-21. According to the Land Ports Authority of India (LPAI), in 2020-21, our Integrated Check Posts (ICPs) also facilitated the movement of 262,396 persons.
The establishment of the LPAI in 2012 has revolutionised land-based trade in India. The LPAI’s mission is to build ICPs, having state of the art infrastructure at selected points of the Indian borto facilitate transit and trade.
Improvement in trading across border
LPAI, through its various initiatives such as the setting up of ICPs by evaluating and up-grading existing Land Custom Stations (LCSs) and ensuring their multi-modal connectivity, the integrated Land Port Management System (LPMS) has been successful in its mission. According to the World Bank’s Ease of Doing Business report, India has improved its ranking in trading across border parameters from 109 in 2012 to 63 in 2019-20. The ICPs house various facilities such as customs, immigration, border security, and quarantine, among others, within a single facilitation zone.
They act as a time saver as immigration and customs officials sit in adjacent buildings for faster clearance of goods and passengers. Hence, ICPs, providing secure, seamless and efficient systems for cargo and passenger movements, are reducing dwell time and trade transaction costs for promoting cross-border trade and people-to-people contacts, and endeavour to imbibe the best international practices.
Beyond their role in enabling bilateral connectivity, the ICPs are also an essential part of India’s ‘Act East’ initiatives. Currently, there are nine operational ICPs on the Indian border. They are: Attari, Agartala, Dera Baba Nanak (only for pilgrimage movement), Jogbani, Moreh, Petrapole, Raxaul, Srimantapur, and Sutarkandi.
It is not surprising that India shares the highest number of ICPs with Bangladesh, its largest trading partner in South Asia (Trade Statistics, 2020-21), with whom it has more than 4,000 kilometres of border. According to a 2021 Asian Development Bank report, titled “Strengthening Trade along the Dhaka-Kolkata Route for a Prosperous and Integrated South Asia”, land-based trade accounts for more than two-fifths of the total trade between India and Bangladesh.
Similarly, India’s second-largest trading partner in South Asia is Nepal, with whom India has two ICPs, at Jogbani and Raxual. This is followed by Pakistan and Myanmar where one ICP each is at Attari and Moreh. India’s border with Bhutan is yet to have a functional ICP.
Going forward
While ICPs are facilitating India’s cross-border with its neighbours, it is necessary to address some existing challenges for furthering the ease of doing trade across borders. They include absence of digitisation on both sides of a land port, port restrictions due to sub-optimal cargo-handling infrastructure, etc.
In this context, it is important to refer to a recent study, Measuring Export Related Port Logistics in India: An Attempt to Rank Major Ports, by Dripto Mukhopadhyay and Sanjib Pohit, respectively Founder Director, Ascension Centre for Research and Analytics and Professor, National Council for Applied Economic Research. They analysed 22 major ports of India on the basis of 11 parameters.
It was found that the ports in the eastern and the southern regions of the country significantly lag in terms of efficiency compared with those in the western and the northern regions. Even among the five worst performing ports, the index value of export-related logistics efficiency of the Petrapole land port, having an ICP, was lowest – 50.44 as compared to the Chennai port (63.69, first among the Worst 5) and the Jawaharlal Nehru Port Trust in Mumbai (84.61, first among the Best 5).
Thus, the sooner the land ports address their infrastructure gaps for logistics efficiency, the easier it will be for India to become more competitive in its neighbouring markets. In short, in order to improve this efficiency, magnified efforts need to be undertaken to strengthen infrastructure in and around the existing and future ICPs.
First and foremost, it is crucial to develop reciprocal infrastructure at the ICPs for their harmonised development including that of the information system. Large-scale absence of mirror infrastructure at the ICPs are impacting their optimal use in respect to reducing the time and cost of doing trade.
Second, there is a strong need to develop ‘approaching’ infrastructure to the ICPs for facilitating logistics supply chain processes. Active involvement of sub-national governments in infrastructure development plays an important role in this regard by aligning national projects with sub-national projects to adequately facilitate transit and trade through land-based routes.
Third, establishing functional regulatory facilities (such as quarantine facilities, testing and laboratory facilities) at the ICPs and their digitisation is essential to avoid delays in transit. Building hard and soft infrastructure to deal with regulatory issues while promoting paperless trade will help save time and cost, and build a database for informed decisions and policy making in future through the application of new technologies such as the blockchain.
Fourth, human capacity development is a must. Technical training is required to increase officials’ knowledge in applying technologies and strengthen institutional capacity in border trade management. For this purpose, the Indian Customs, along with the LPAI, may develop an exclusive Trade Intelligence Unit.
Finally, an integrated development approach such as the twin-town model should be considered for overall development of border areas in and around the ICPs. Development of essential infrastructure for health, education, etc. and leisure facilities are necessary to encourage the posting of trained officials.
(Agrawal and Verma are Research Associates at CUTS International, a global public policy think- and action-tank on trade, regulation and governance. The views expressed are personal and exclusive to India Narrative)
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