Infrastructure and Logistics Gaps to
Regional Trade and Cooperation in
South Asia Region
12 June, 2013
World Bank, Washington DC
1
SAR also lags behind other regions in terms of
logistics performance…
2
especially among the landlocked states/regions
3
In 1909, freight could move by rail and road seamlessly
from Karachi to Lahore to Delhi to Dhaka
4
In 2013, lack of regional transit agreement leads to
significant inefficiencies in transport routes used for trade
Current
Potential
A container takes 35 days to get from
New Delhi to Dhaka
5 days transit time via direct rail
connectivity from New Delhi to
Kolkata over Jamuna Bridge to
Dhaka



Rail: New Delhi-Bombay
Maritime: Bombay-Colombo/SingaporeChittagong
Rail: Chittagong-Dhaka
A container travels 7162km to get from
Dhaka to Lahore using Maritime Route
2300km overland through India
Assam tea travels 1400km to get to
Kolkata Port
Goods from Agartala (NE India) travel
1645km to reach Kolkata Port
The southern border of Tripura
State of NE India is only 75km
from Chittagong Port if travel
through Bangladesh is permitted
A container traded between
Afghanistan to India must travel
through ports in Iran
Overland transit through Pakistan
would shorten distances
significantly
5
The rail network in SAR
 Major trade corridors in India, Pakistan and Bangladesh are connected to
rail networks
 But the landlocked states have no rail network
 Gauge differences, missing links, insufficient equipment and incompatibility
but most of all lack of transit agreement prevent seamless cross-border
movement
Country
Bangladesh
India
Pakistan
Rail Network
(Total Route Km)
2,835
63,974
7791
Sri Lanka
1463
Source: World Development Indicators
6
Challenges along SAARC Rail Priority Corridor 1:
Lahore-Delhi-Kolkata-Dhaka-Mahishasan-Imphal
PR financial and ops problems,
trains return empty to Amritsar
Shortage of airbraked locos and
wagons. Only BCX covered
wagons permitted. Train
interchange daylight only. No
thru transit – transloading
required
Ranaghat-Gede:
duplicative inspection,
rake marshalling/
deconsolidation,
shortage of locos
Kolkata:
Long
dwell
time
Insufficient capacity at
Jamuna Bridge
Rolling stock and gauge
differences. Shortage of
locos and wagons. Only
BCX wagons allowed. Train
interchange daylight only
7
Challenges along SAARC Rail Priority Corridor 4:
Birgunj/Raxaul-Katihar-Rohanpur-Chittagong with links to Jogbani and Agartala
Missing rail link
at JogbaniBiratnagar, gauge
incompatibility
Rohanpur-Singhabad:
gauge differences,
insufficient BR rail
lines cause
deconsolidation,
shortage of BR locos
Missing rail link
at AkhauraAgartala, gauge
incompatibility
8
The road network in SAR
Country
Total
Roads
(Km)
Paved roads
as % of total
roads
Road Density
(km of road
per 100 sq
km of land
area)
Afghanistan
42,150
29.30
6.0
Bangladesh
239.226
9.50
14.8
Bhutan
8.050
62.0
18.0
India
49.5
125.0
Maldives
4,109,59
2
88
100
29.0
Nepal
19,875
53.9
14.0
Pakistan
258,350
65.4
32.9
Sri Lanka
97,286
81.0
173.9
Source: Latest World Development Indicators, 2008-10
 Bangladesh, India, Pakistan and Sri
Lanka have extensive road
networks; road density highest in
India and Sri Lanka
 Landlocked States: Afghanistan,
Bhutan and Nepal, have limited
networks and lower levels of
access.
 Most countries need to increase
proportion of paved roads
 Main roads on major trade
corridors narrow and of low
quality: < 10,000km are multi-lane.
 All ports were served by two lane
roads with high traffic flows
competing with pedestrians,
bicycles, non-motorized vehicles,
especially around urban areas.
9
Priority SAARC Road Corridors
Wagah-Attari:
transloading, no
customs at border,
insufficient border post
infrastructure, positive
list of 137 products,
duplicative and manual
procedures, no EDI, no
thru transit of AfghanIndia bilateral trade
No transit through
Bangladesh for
Indian goods from
Kolkata to reach
NE through
PetrapoleBenapole-AkhauraAgartala
Raxaul-Birgunj:
transloading,
duplicative and
manual procedures,
no EDI
CORRIDORS
COUNTRIES
Lahore–New
Delhi–Kolkata–
Petrapole–
Benapole–Dhaka
(2,322 kms) Agartala
Pakistan, India,
Banladesh
2
Kathmandu–
Birgunj/Raxaul–
Kolkata/ Haldia
Nepal, India
3
Thimphu–
Phuentsholing–
Jaigon–
Kolkata/Haldia
Bhutan, India
4
Kathmandu–
Kakarvitta–
Phulbari–
BanglabandhaMongla (1,362kms)
or ii) Dhaka–
Chittagong
(1,442kms)
Nepal, India,
Bangladesh
5
Sandrop Jongkhar–
Guwahati–
Shillong– Sylhet–
Dhaka–Kolkata
Bhutan, India,
Bangladesh
6
Agartala–
Akhaura–
Chittagong
Bhutan, India,
Bangladesh 10
1
PhulbariBanglabandha: Nepali
and Bangla goods
must move by convoy
thru Indian territory
Petrapole-Benapole:
transloading, 600
trucks/day, 80% of
bilateral trade,
duplicative/manual
procedures, no EDI
Barasat-Petrapole
narrow congested
road section
Mongla and
Chittagong Ports
insufficient capacity,
rail missing link at
Khulna-Mongla
Indo-Bangladesh IWT Protocol Route
Short term of Bilateral Protocol
prevents private sector investment;
no night-time navigation permitted;
dredging needed esp Nov-May; more
and better navigational aids, cargo
handling equipment and terminals
needed, esp in Bangladesh
Akhaura could soon become
one of the main doorways to a
$1billion/year trade corridor,
but need wider approach roads
on both sides, India building ICP
Ashuganj Port needs better
terminals, equipment,
operations,
Need rail connectivity from
Tripura
11
Infrastructure Gaps exist but the real challenge is no
freedom of transit, protectionist policies and NTBs
In addition to investments in infrastructure, High
Impact Solutions include:
Rail
Road
IWT
Gauge/Equipment
TIR Carnet
Longer-term IWT
Standards
Motor Vehicle Agreement Protocol/ Agreement
Harmonization Road Design Harmonization
Regional Bond
Through Bill of Lading
Customs Simplification, Harmonization, and Cross-border Cooperation
Simplification, Harmonization and Mutual Recognition of Quality and
Technical Standards
Removal of NTBs (rules of origin, standards, etc..)
Restrictive Trade Agreements (positive list, etc..)
12
Political Economy Considerations
Level
Global
Issues
-
-
China vs. India competition for spheres of
influence
Smaller countries benefit from cheap
capital/investments
Regional
Countries using transit rights as political or
negotiation bargaining chip
National
Ethnic tensions and political disputes within
national boundaries, lobbying power and
resistance to change by vested interests
Subnational-Local
-
Corruption by officials and informal
groups
weak regulation/monopolies (e.g. trucking
services)
13
A corridor approach focuses implementation efforts on one
particular geographical area while addressing multiple sources
of congestion –
a supply chain is only as good as its weakest link
Corridor
management
Institutions
Infrastructure
Seaport/
Economic
cluster
Mode
interface
Border
Economic
cluster
International transit
Services
• Seaport and
shipping
• Access to
port
• Transit
• Customs and
border
management
• Road and Rail Transport
services
Dry
port
ICD
Gateway /
Economic
cluster
National transit
• Customs and
border
management
• Vehicle change
• Customs and
border
management
• Storage
• Consolidation
• Clearing and
forwarding
• Air freight
• Customs and
border
management
• Transit
• Clearing and
Forwarding
Challenges along a typical SAARC Priority Corridor:
Kolkata/Haldia-Raxaul-Birgunj-Kathmandu: Road and Rail
Challenges:
 Long dwell time at Kolkata/Haldia ports
 Bilateral transit agreement limits Nepali
transit to only one corridor, and only
containerized cargo for rail
 Poor and narrow roads in Nepal and
India
 No rail link in Nepal
 No through bill of lading and inland
clearance
 Duplicative domestic
licensing/documentation
 Duplicative and manual customs
procedures
 Corruption/informal payments at border
and along road corridor
 No cross-border electronic data
interchange
 No mutual recognition of collaboration
on SPS and standards
 Insufficient parking/warehousing facilities
15
WB Approach and Lessons

A Corridor Approach to tackle multiple sources of
congestion along a supply chain

Strengthening Bilateral Coordination Mechanisms

Strengthening National Multi-Sector Coordination
Mechanisms: Role of National Trade and Transport Facilitation
Committee (NTTFC)

Tacking Complex Multi-sector Project in a Weak Capacity
Environment: trust fund support essential, significant resources
devoted to capacity support during project preparation

Relationship and Confidence building
◦ Big vs. Small country: letting smaller country take the lead and
provide capacity/knowledge support
◦ Showing early signs of success: the project design focused on
showing early results (low hanging fruits) as well as long-term success
◦ A regional study tour was key: to forming amicable relationships
16
away from the negotiating table
Nepal-India Regional Trade and Transport Project
Joint IDA-IFC Project: $101 million: financing $99m IDA, $2m IFC parallel cofinancing
First regional trade and transport facilitation project in South Asia Region
Negotiations: May 17, 2013, Board: June 28, 2013
PDO: decrease transport time and logistics costs for bilateral trade between Nepal and India
and transit trade along the Kathmandu-Kolkata corridor for the benefit of traders
by reducing key infrastructure bottlenecks in Nepal and by supporting the adoption of modern
approaches to border management.
Component 1
Modernize transport and
transit arrangements
between Nepal and India



TA for modernization of
bilateral trade and
transit framework
Automating of Customs
Transit Document
Transport management
regulations
- Axle load control
- Road safety
Component 2
ICT systems to
automate processes for
documents related to
imports, exports and
transit



Single Window
Trade Portal
PCO/NTTFC
Institutional
Strengthening
Component 3
Trade-Related
Infrastructure




Expand and upgrade
the NarayanghatMugling road
Kathmandu Inland
Clearance Depot (ICD)
Development
Birgunj and Bhairahawa
ICD Improvement
Multi-agency Labs
17