Stakeholders’ Conference on Assessing Bangladesh-India Trade Potentiality, November, 2013, Kolkata Prithviraj Nath, Consultant, CUTS International Nilanjan Banik, Consultant, CUTS International Major Findings and Recommendations from Phase I and Plans for Phase II

Phase I: Brief Idea The overall goal of the study was to frame policy proposals for improving India-Bangladesh trade through land route which will in turn generate welfare outcomes such as new market opportunities for small-scale manufacturing and agrarian sectors, especially for border states.

Phase I: Brief Idea Primary Research Undertaken at five major Land Custom Stations (LCS)viz. Petrapole, Ghojadanga, Hili, Mahdipur, Changrabandha Looked at the transportation, infrastructure, regulatory, process-related, capacity and manpower related bottlenecks in trade through land route Studied Border Haats at Meghalaya and Tripura to understand potential benefits that can accrue by replicating them at other locations along the border

Issues identified through Survey at the Land Custom Stations

Better, Two-lane Approach Roads Needed

Absence of Central Warehousing Corporation (CWC) controlled parking and warehousing facilities Absence of Weigh Bridges

Absence of Plant Quarantine (PQ) facilities

Need for e-enabling of documentation and checking systems to reduce delays Need to improve IT infrastructure and allocate trained Manpower Bank Branches with all facilities needed at LCS

Need for Full time Custom officials and better infrastructure for offices/quarters

Border Haats are successfully generating Economic Benefits for the border villages

Recommendations Improve PQ facilities. Alternatively look at harmonising SPS regulations across the border through a SPS related agreement between the nations. Signing of the Motor Vehicle Agreement Better Utilisation of Existing Railway links to ease pressure on road route and enhance trade volume Improving and Regulating Trade Services Replication of Border Haats at New Locations Reduce the respective Sensitive List

Phase II The overall objective of the study is to frame policy recommendations for: Signing and operationalizing of the Motor Vehicle Agreement and drafting/signing of a SPS Agreement between India and Bangladesh, hence to benefit and ease the efforts of the traders. Replicating Border Haats along the India-Bangladesh border towards leveraging the economic and social benefits accruing out of it.

Activities: Primary Survey at some of the major LCSs in the states of West Bengal, Tripura, Assam, Meghalaya and Mizoram Focused Dialogues with exporters and export associations High level Inter-Ministerial meetings with government for reviewing draft MVA Agreement and also for proposing SPS agreement in India Track 2 meeting involving government and stakeholders of both the countries

Data Primary Survey Mapping land custom movement of Goods across time period Mapping movement of goods before and after SPS measures Mapping to be done across major export items (HS Code specific)

Outcome Variable (General) Nature of goods exported – perishable vis-à-vis non perishable Red tape at the LCS (paper works and government policy) What can be done?

Outcome Variable (Specific) Truck movement time between Kolkata and Petrapole Waiting time and cost of waiting at border Status of warehouse facilities Status of banking facilities Bribe payments, extortion and pilferage Soft infrastructure (Cargo scanner, IceGate, Internet facilities, etc.) Measures for improvement/ Alternatives?

Analytical Framework Following, Krueger (1990), Kohli (1991) and Paulino (2002): Export Demand Function Motor Vehicle Act Sanitary and Phytosanitary Dummy

Expected Outcome If exports are price elastic then we would expect positive sign for the coefficient on exchange rate variable. If exports are indeed competitive then expected sign on relative price variable is negative. Effect of Sanitary and Phytosanitary sanction can be captured through dummy. The coefficient on distance variable can be used for counterfactual evidence to measure impact of Motor Vehicle Agreement. 26

Expected Outcomes Better understanding by policy makers on issues and concerns with respect to the present draft of the MVA agreement Better understanding and consensus on the elements and components that need to be further incorporated into the document for better acceptance by all stakeholders. Triggering the process of drafting of SPS agreement and expediting the signing of the MVA agreement between India and Bangladesh Better understanding on the benefits of Border Haats and higher consensus on replicating of such Haats along other locations along the India-Bangladesh border Removal of barriers to trade and enhanced trade volumes between the two nations in the long run

Expected Outcomes Better understanding by policy makers on issues and concerns with respect to the present draft of the MVA agreement Better understanding and consensus on the elements and components that need to be further incorporated into the document for better acceptance by all stakeholders. Triggering the process of drafting of SPS agreement and expediting the signing of the MVA agreement between India and Bangladesh Better understanding on the benefits of Border Haats and higher consensus on replicating of such Haats along other locations along the India-Bangladesh border Removal of barriers to trade and enhanced trade volumes between the two nations in the long run

Thank You