India and Bangladesh have signed the standard operating procedure (SOP) to launch the ‘Agreement on Coastal Shipping’, which is expected bring down the logistic costs of export-import cargo between the two countries.
The two sides have also agreed upon the use of vessels of River Sea Vessel category for Indo-Bangladesh coastal shipping.
"Once it is operational, the coastal shipping agreement will enable a huge saving in logistic costs of EXIM transport between the two countries," Union Shipping Minister Nitin Gadkari said in a statement.
"The SOP has been framed as per the terms and conditions of the agreement on coastal Shipping and both India and Bangladesh have agreed to its provisions," Gadkari said after officials from both the sides inked the SOP.
The present connectivity through sea route with Bangladesh is through ports of Colombo and Singapore. The long sea route adds significantly to the transportation costs of EXIM trade.
There is no significant cargo movement between sea ports of Bangladesh and India as it is not profitable for the big vessels to operate between these sea ports.
Under such circumstances, there is a need for smaller ships to provide direct connectivity between the eastern sea ports of India, Chittagong and other ports in Bangladesh. This, besides improving the connectivity would also provide competitive freight rates.
During this financial year, India, for the first time, is using the Indo-Bangladesh river protocol to transport foodgrains via Ashuganj to Tripura.
However, the quantum of cargo has not picked up because of low draft in the upper reaches of Bangladesh rivers and also because of certain non-trade barriers, the release added.