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    India has a Rs 4,500-crore border business plan in the making

    Synopsis

    The objective of this coming plan has two parts — increase trade and improve ties with neighbour countries.

    Betting big on border: A Rs 4,500-crore plan
    Life has become a little easier for Mohammad Sawan. Nowadays, the Bangladeshi truck driver has to wait only for a few hours to get the documents processed at the Petrapole border check post. Earlier, he would have to wait for a couple of days before he can hand over the goods to an Indian agent for its onward journey to Kolkata, 80 km away.

    The bottlenecks at the border check post were eased in 2016 when Petrapole was upgraded to an integrated check post (ICP), from a land customs station (LCS), as part of the government’s plan to improve trade with neighbours. Chances are that the Marks & Spencer shirt you recently purchased from an authorised store in eastern India was stitched by a Bangladeshi tailor and was transported by road, by drivers such as Sawan, into India through the Petrapole-Benapole (Bangladesh) border.

    The border scene: At a glance

    15,000 km
    Land border with Pakistan, Nepal, China, Bhutan, Bangladesh, Myanmar & Afghanistan

    109
    Number of land customs stations through which India’s border trade takes place

    $13 billion
    India’s trade through its land border in 2017-18 (Export: $11.3 bn + Import: $1.7 bn)

    1.7%
    Share of trade through land borders (India’s trade in 2017-18 was $769 bn)

    3.7%
    Share of India’s export through land borders (India’s export in 2017-18 was $303 bn)

    India’s trade through land borders was only $13 billion in 2017-18. Of this, exports constituted $11.3 billion, accounting for 3.7% of total exports in the period. To improve trade with neighbours, the government wants to develop the land-border infrastructure. This can also help land-locked countries such as Nepal and Bhutan get access to seaports. Giving such economic lifelines to these neighbours would also ensure that the relationships with them improve.

    graph-1


    “Improving trade with neighbours is our top priority,” Minister of Commerce and Industry Suresh Prabhu tells ET Magazine. “The potential for India’s export to Saarc countries is $61 billion as against $14 billion now.” A healthy trade relationship with a neighbour often results in a healthier diplomatic tie, too, he adds.

    graph-2
    Seven of the 109 LCS have been upgraded as integrated check posts — where immigration and customs officials sit in adjacent buildings for faster clearance of goods and passengers. While LCS lack even basic facilities, ICPs like the one in Petrapole have parking bays, weighbridges, cargo terminals, warehouse facilities, public utility facilities, banks/ATMs, foreign exchange bureaus and cafeterias, among others. Now, the Cabinet Committee on Security is looking to approve a Rs 4,500-crore proposal to improve 13 more land borders, says Anil Bamba, chairman of the Land Ports Authority of India, which coordinates with state and central agencies over passage of passengers and cargo through land borders. The upgrade would cover the border posts in Jaigaon (India-Bhutan), Panitanki (India-Nepal) and Hili and Fulbari (India-Bangladesh).

    graph-3
    The decision to upgrade LCSs to ICPs is already bearing fruit. The Petrapole ICP, a crucial trade gateway on India’s 15,000 km land border, clocked a border trade of about Rs 19,000 crore in 2017-18, compared with about Rs 16,000 crore in 2015-16 (the Petrapole check post was upgraded to ICP in 2016).

    The truck driver, Sawan, says, “I am carrying ready-made garments weighing 13 tonnes. All these packets are for big companies in India.” The Dhaka resident does not know what is in the packets but going by government data, it might well have been goods for MNCs in India.

    Marks & Spencer and VIP Industries paid about Rs 11 crore each as import duty through this border ICP in 2017-18, according to the Central Board of Indirect Taxes and Customs. The other major companies using Petrapole to import goods includes Reliance Retail, Raymond Apparel, Aditya Birla Fashion and Retail, and Puma Sports, says the data.

    Among the exporters, Tata Motors topped the chart at Rs 1,456 crore last financial year. The other major exporters included Ahmedabad-headquartered textile manufacturer Arvind and the manufacturer of Volvo and Eicher trucks, VE Commercial Vehicles. Automobile companies such as Ashok Leyland, Hero Motorcorp and Mahindra and Mahindra also use this ICP to export goods.

    graph-4


    Apart from Petrapole, ICPs are also operational in Attari (India-Pakistan border), Agartala (India-Bangladesh), Raxaul (India-Nepal) and Jogbani (India-Nepal). The Moreh ICP, bordering Myanmar, already has a new passenger terminal but the cargo terminal is being built. The seventh ICP, at Dwaki in Meghalaya bordering Bangladesh, is under construction. “About 95% of our border trade through land happens through these checkpoints. Once all the 20 ICPs (including the 13 proposed ones) are ready, trade bottlenecks would be eased a lot,” says Bamba, adding how the cabinet secretary-chaired National Committee on Trade Facilitation has been emphasising a lot on border trade.

    graph-5


    New Delhi’s decision to fast-track trade facilitation infrastructure on its border has a dimension that goes beyond economics. China’s increasing presence in the neighbourhood, and cheaper imports from that country, is a cause of strategic concern for India. “Yes, it’s a reality that China is already present in some of our neighbouring countries. We will compete with China here, as we compete with it in Africa and elsewhere,” commerce minister Prabhu quips.


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    ( Originally published on Oct 13, 2018 )
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