Trade, Regional Cooperation and Connectivity between North East India and Bangladesh Focus on Tripura Siddhartha Mitra Director (Research) CUTS International

Structure of Presentation Map and related discussion North Eastern India: strengths Why focus on Tripura? Transit: Need and pre-conditions for implementation Recommendations and questions

Source: IBEF North East and Neighbouring Countries

North East: Many Strengths Rich in mineral and water resources  Facilitates power generation  Makes industrialisation easier  Boost to agriculture  Alternative mode of cheap passenger and cargo transport Fertile Soils Mountainous terrain  Facilitates generation of hydel power  Non-extreme climatic conditions  Gives a boost to cultivation of valuable cash crops such as tea  High literacy  Great potential for tourism

Why Focus on Tripura? Shares 85 percent of its 1000 km border with Bangladesh Surrounded by Bangladesh on three sides Second smallest state in the North East but accounts for 48 percent (884 kms) of 1840 km long border with Bangladesh Rapid rate of growth of state income over the last decade: per capita income has almost reached the Indian average (Rs at prices in ) Growth momentum can be further enhanced through boost to its fledgling manufacturing sector (3 percent of state income) Bangladeshi markets and FDI from Bangladesh Access to markets in India (outside North Eastern India) through Bangladesh

Rich in natural gas – potential power exporter to Bangladesh Tremendous potential for the expansion of horticulture and plantation crops -- requires stimulation through market access Huge cultural similarity with Bangladesh – a favourable factor for trade with and investment and tourists from Bangladesh Potentially high level of human capital (literacy rate of 73.2 percent as against 63.4 percent for India as a whole) Why Focus on Tripura?

Avails of practically the only exporting customs station that Bangladesh has vis-à-vis the North East -- Akhaura 80 percent (4.43 out of Rs crores in ) of Bangladeshi exports to North East India despite poor infrastructure and other facilities oBangladeshi side in 2004: no warehousing and parking facility; erratic electricity supply; no fixed telephone facility, or fax oIndian side in 2004: slightly better as phone facility, fax and facility existed but no warehouse Initiatives to promote trade on both sides In 2002: setting up of a joint study group of the Tripura and Chittagong Chambers of Commerce and Industry Aug 28, 2009 – Joint Tripura-Bangla taskforce on trade set up

Bangladesh - An Important Source of Connectivity for North Eastern India Access for goods by land very difficult Connected to the rest of India by a 22 km wide stretch of land called the chicken’s neck Goods have to travel parallel to Bangladeshi border and enter through the chicken’s neck – high transportation costs Bangladesh can provide easier connectivity for North East India to the rest of India and through Chittagong Port to the rest of the world

Bangladesh - An Important Source of Connectivity for North Eastern India Provision of connectivity through Bangladesh makes travel to rest of India much shorter Pre-partition journey from Kolkata to Agartala barely 360 km; now as much as 1680 km Bangladesh is a potentially easy source of connectivity to the rest of the world Agartala is barely 248 kms from Chittagong All other N.E. capitals between 600 and 900 km Win-win situation for both sides – easier trade for North East and revenues for Bangladesh

Source: Bangladesh Enterprise Institute Map with Bangladeshi Land Customs Stations

Connectivity: Basics Provision of connectivity through Bangladesh would involve sealing, guarantee and documentation flow – requires good intranet connectivity between customs stations Requires detailed inspection by customs officials at port of entry and exit Warehousing, reliable electricity supply, banking a must 2004 study shows that these are lacking in both Indian and Bangladesh customs stations

Conclusions and Questions North East, especially Tripura and Bangladesh enjoy a huge scope for mutually beneficial trade, investment and other forms of regional cooperation Poor state of trade facilitation is a dampener in this regard Connectivity through Bangladesh can provide easier access for the North-East not only to the rest of India but to the rest of the world

Conclusions and Questions Viable provision of connectivity would require modernisation of customs station on both sides The important question is regarding the form such connectivity would take  Transhipment: Indian goods destined for North Eastern India through Bangladesh offloaded onto Bangladesh trucks OR  Transit: Indian trucks allowed to pass through Bangladesh