Inland waterways-borne sub-regional trade – a work in progress

Financial Express, August 9, 2017
Consolidation of the Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional cooperation has been under process for the last couple of years. The Motor Vehicle Agreement (MVA) signed by the four countries could be a landmark move in this direction. But Bhutan backtracked in ratifying the deal due to domestic opposition. Thus, it has become BIN MVA. Nevertheless, the essence of BBIN sub-regional cooperation still prevails.

Now, there is a move to boost sub-regional trade through the inland waterways of these countries. The Asia Foundation is currently financing a project in this regard. Under the project, four regional organisations are jointly conducting dialogues and research. These are: Unnayan Shamannay in Bangladesh, Royal Society for Protection of Nature in Bhutan, Consumer Unity and Trust Society in India and South Asia Watch on Trade, Economics and Environment in Nepal.

These civil society and research organisations point out that the BBIN region is fed by two Himalayan rivers, the Ganges and the Brahmaputra, and historically, the inland waterways created by these river systems have helped human activities to thrive over the centuries. New political boundaries, however, divided the region and decades-long tussle over water resources emerged. The research organisations suggest that time has come to change the course, and policy makers in the BBIN sub-region should explore the potential of inland water trade keeping in view the fact that it is cost-effective.

While the initiative taken by the regional research organisations is a welcome step, how feasible it is to make inland water trade a lucrative and win-win proposition is a matter of detailed analysis.

BANGLA-INDIA DEAL: Inland waterways in the BBIN sub-region basically comprise Bangladesh-India inland waterways as the two countries share 54 common rivers including Ganges/Padma and Brahmaputra. There is a Protocol on Inland Water Transit and Trade (PIWTT) between Bangladesh and India which was first signed in 1972 and later renewed several times. The protocol guides the bilateral trade and transit through the inland waterways, rivers to be precise. Currently, the two countries are using four river routes under the protocol to carry their products.

Bangladesh uses the river routes for trade purpose only, but India uses them for both trade and transit. By using the Bangladeshi waterways, India is carrying products from West Bengal to Assam and vice versa. The quantity of transit cargo is still quite small compared to bilateral trade cargo. In the past fiscal year (FY17), total volume of transit cargo was 6,178 tonnes, while bilateral trade cargo stood at 2.61 million tonnes. Moreover, Kolkata-Ashuganj-Agartala route has turned into a multi-modal route as the use of both waterways & road exists there.

Around 99 per cent of the water vessels carrying the trade and transit cargoes of India are of Bangladesh, according to the latest statistics of the Bangladesh Inland Water Transport Authority (BIWTA). These mainly carry import cargoes as Bangladesh’s export to India using inland waterways is virtually zero. No export cargo was carried from Bangladesh to India during the last five fiscal years (2012-2017). Only one product, fly ash (an ingredient for cement production), dominates import from India.

There is a scope to enhance bilateral trade through the inland waterways. It, however, largely depends on the comparative advantage over the roads and highways. Around 95 per cent of Indo-Bangla trade is now road-dependent while the rest takes place through railways, sea routes and rivers.

As trade is growing, the existing road networks are coming under pressure. Bangladesh has taken a number of projects to rebuild, reconstruct and expand the current road networks, but the progress is slow. There is also an effort to improve the rail network and re-establish the historical Indo-Bangla rail links. A part of the Indian credit line is allocated for this purpose.

Besides, focus is there on improving inland waterways. To ensure navigability, India has offered to finance 80 per cent of the cost worth $34 million for dredging the Sirajganj-Daikhawa stretch of the Jamuna river and Ashugunj-Karimgunj stretch of the Kushiyara river in Bangladesh. In fact, India has long-term strategic interest in these waterways. Sirajganj-Daikhawa stretch is likely to facilitate creating around 4,000-km-long river route from Varanasi in Utter Prodesh (UP) to Sadiya in upper Assam (bordering Arunachal Pradesh) through Bangladesh.

Thus, India’s interest in Bangladesh’s inland waterways is mostly to ensure smooth transit through the rivers. Though multi-modal transit-transhipment arrangement is there, full-fledged infrastructure is still under construction.

WATER SHARING AND OTHER ISSUES: Promoting trade through inland waterways between Bangladesh and India brings the most disputed water sharing issue on the table. At a recent discussion meeting in Dhaka, organised to present stakeholders’ perception of trade through inland waterways, many discussants raised the issue. They were of the view that India is not giving due share of waters of the common rivers in time. In the dry season, India blocks the natural water flow using barrages and dams while in full monsoon, it releases additional water to avoid overflowing. As a consequence, in dry season, Bangladesh suffers from shortage of water while in monsoon the country faces overflow of water causing flood.

Being a lower riparian country, Bangladesh is thus in a disadvantageous situation. The upper riparian India oftener than not fails to honour international laws regarding protection of the interest of the lower riparian country. Despite repeated assurances, India is yet to sign the Teesta water sharing deal. Water sharing of common rivers like Feni, Manu, Muhuri, Khowai, Gumti, Dharla and Dudhkumar has also remained unresolved.

Among the other critical areas, dredging is a matter of concern. Although it is essential to maintain navigability of the waterways, it may be a threat to aquatic ecosystem, especially where fish sanctuaries exist. For example, there is a Hilsha sanctuary close to the Chandpur inland water hub. Increased traffic of water vessels and human activities will disrupt the natural condition of the sanctuary.

Thus, reduced cost of transportation through the inland waterways can’t be the only consideration. How to reduce the indirect costs due to trade enhancement also requires attention.

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