Report

74 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
minor routes (Delhi-Amritsar-Lahore, India-
Singapore-Karachi, India-Hong-Kong-Karachi,
Mumbai-Karachi (boats, launches), Mumbai-
Kabul-Bara, Karachi-Chamman-Afghanistan, and
Karachi-Peshawar-Afghanistan). Mukherjee (2001)
indicates that unofficial exports through both
routes comprise machinery, cement, tyres, tea,
medicines, videotapes, alcoholic beverages, chemical
products, steel utensils, etc. The barriers to trade
are in the form of bank requirements, application
of measures related to standards necessary to protect
human, animal or plant life or health, to protect
environment and to ensure quality of goods, and
poor connectivity.
• India-Sri Lanka in 1991 stood at $186 million while
unofficial trade estimates were $264 million. While
India had an official trade surplus, unofficial trade
was more or less in balance. Informal trade between
the countries has substantially fallen due to the FTA
and ease of trade between the countries. One reason
for persisting informal trade is there are high domestic
taxes on imports though tariffs have come down.
Taneja (2005) finds that the main feature of informal
trade in the region is that the commodity basket is
not divergent from the formal trade patterns (except
for Nepal). Further, informal trade is also seen to occur
in commodities for which levels of tariff have substantially
declined. There are high levels of informal trade
between India and Nepal and India and Bhutan despite
there being almost zero-tariffs between these countries.
This points strongly towards the notion that institutional
factors are the main barrier to trade.
Institutional Barriers
Other than procedures, ADB (2007) identifies the major
constraints at the South Asia borders as the following:
increasing the port storage is grossly inadequate. For
example, at the Petrapole-Benapole border, it invariably
takes longer to unload vehicles into the land port than
the physical clearance time.
Trader Practices: Importers often do not submit
required clearance documents to customs. Since much
time is needed to collect the vast amount of supporting
documents, importers use the godowns as storage as
they make for the required financial and documentation
arrangements as storage charges are relatively low.
Hence the storage is being used for purposes it was not
designed for.
Lack of Cross-Border Transport Agreements: Due to
lack of through-transport movement, there are
transport inefficiencies at the interface. The situation
is exacerbated due to trader and transport practices.
THE KOLKATA-PETRAPOLE/BENAPOLE
CORRIDOR
Indian exports to Bangladesh are growing at 21% per
year with the current annual value at US$1,102 million.
Trade in the opposite direction is weaker with just
US$84 million worth of goods being moved from
Bangladesh to India. Figure 9.1 indicates the trends in
Indo-Bangladesh trade. The balance of trade has
significantly been in favor of India. On an average,
280–300 trucks per day carry Indian exports to
Bangladesh, comprising rice, fertilizers, raw materials
for chemical and apparel industries, and manufactured
goods including tyres and iron and steel articles, passing
through congested towns such as Barasat, Habra, and
Bongaon. However, only 40–50 trucks handle imports
from Bangladesh to India, which is jute products,
beetlenut, and hilsa fish.
Lack of Border Infrastructure and Traffic Planning:
Most of the border crossings between the South Asia
countries are not designed to handle the volumes of
traffic that currently passes through them, which results
in severe traffic congestion and delays in handling the
shipments.
Land Ports at the Border: Lands are required to be
transferred into different vehicles in most cases at the
borders. The land ports comprise open storage and
closed godowns within the customs controlled area.
Due to increased trade, the storage dwell times has been
Fig 9.1 Indo-Bangladesh Imports and Exports,
1980–2004