SOUTH ASIA- REGIONAL COOPERATION OF TRADE FACILITATION: WAY FORWARD 1

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1 Release as received SOUTH ASIA- REGIONAL COOPERATION OF TRADE FACILITATION: WAY FORWARD 1 Arvind Mehta India Asia Pacific Trade Facilitation Forum 2011 Trade facilitation is important to increase trade in the sub-region and many non-tariff barriers need to be addressed in the region. These tasks are challenging as it involves multiple countries and within each country many different Ministries and Departments. The optimal results are possible when efforts are synchronized among the countries, and within each country, there is concerned efforts for various ministries concerned. Given these challenges, there is therefore need to pay much attention towards the trade facilitation. In order to increase the trade with the neighbouring countries, India has initiated the following :- (a) Integrated Check Posts(ICPs): India is developing the 13 Integrated Check Point on the border with Pakistan, Bangladesh, Nepal and Myanmar. The ICPs are dedicated passenger and cargo terminal providing customs and immigration counters, x-rays scanners and testing and quarantine facilities, banking facilities, warehouse and cold storage, passenger amenities and other related facilities such as fuel stations, in a single complex. At an estimated cost of Rs crores, the establishment of the addressing bottlenecks created by inadequate infrastructure and facilities. Construction of some ICPs faced initial delays associated with land acquisition, but they have now been largely resolved. The ICP on the Pakistan border (Attari-Wagah) will be the first of the ICPs to be inaugurated later this year. The rest are planned for completion by mid The details of ICPs are as below:- The approved tentative cost of Up gradation of 13 th ICPs by MHA. Phase I S. No. Location State Border Estimate Cost including Land acquisition ( RS. in Crores) This opinions, figures and estimates set forth in this publication are the responsibility of the author and should not necessarily be considered as reflecting the views or carrying the endorsement of the United Nations.

2 1. Petrapole West Bengal India - Bangladesh Moreh Manipur India - Myanmar Raxaul Bihar India - Nepal Attari Punjab India - Pakistan ( Wagah) 5. Dawki Meghalaya India - Bangladesh Akhaura Tripura India - Bangladesh Jogbani Bihar India - Nepal Total Phase II S. No. Location State Border Estimate Cost including Land acquisition ( Rs. in Crores) 1. Hilli West Bengal India - Bangladesh Chandrabangha West Bengal India - Bangladesh Sutarkhandi Assam India - Bangladesh Kawarpuchiah Mizoram India - Bangladesh Sunauli Uttar Pradesh India - Nepal Rupaidha Uttar Pradesh India - Nepal Total The progress made in development of ICPs is at Annexure-I. (b) Establishment of Land Port Authority on India (LPAI): The LPAI will be responsible for the management and regulation of the ICPs, similar to the roles of the Airport Authority and the The Railway Authority of India. However, as the LPAI is not yet operational, an Empowered Steering Committee (ESC) under the Department of Border Management, Ministry of Home Affairs, has been constituted as an interim arrangement, The power and functions of the ESC include: (i) engaging technical and commercial consultants/project developers, (ii) identifying business/developers for execution/running of various ICPs, (iii) arranging funds, (iv) finalizing project design, (v) releasing funds, (vi) monitoring projects, (vii) coordination with various government agencies, and (viii) taking administrative and financial decisions on proposals involving expenditure up to Rs. 100 crore. (c) Development of Other Land Customs Stations: A number of states in the North Eastern Region (NER) have initiated projects to upgrade infrastructure and facilities in some of the remaining LCS through funds available from the government s Assistance to States for infrastructure Development of Exports (ASIDE). Specifically, the ASIDE scheme is currently supporting three LCSs in Meghalaya, four in West Bengal, and one in Tripura. However, the funds available through the ASIDE program do not fully meet some of the state s needs and priorities. The details of the LCS as below:-

3 Name of LCSs at Bangladesh Border Total cost of the project (Rupees in Crores) ASIDE Contribution (Rupees in Crores) Mahadipur (WB) Nil Gojadanga(WB) Amount released under ASIDE Hilli(WB) Phulbari (WB) Dalu (Meghalaya) Borosora ((Meghalaya) Ghasuapara (Meghalaya) Srimantpur (Tripura) Total Besides the above, the development of Trade Facilitation Centre (TFC) at Salamabad and Chakan-da-bagh on India-Pak border at an estimated cost of Rs , development of Sherathang LCS on India-China border at an estimated cost of Rs Crores and development of Melbuck LCS on India-Myanmar border at an estimated cost of Rs crores. (d) Customs reforms: In parallel with the above initiatives focusing on hard infrastructure the Government is also making tangible progress in improving overall the customs system and procedures in the areas of pre-shipment clearance, risk-based inspections, post clearance audit and voluntary compliance. Combined, these measures are expected to significantly reduce cost and delays associated with customs clearances, as well as reduce scope for rent-seeking. (e) Border Haats. MOU on Border Haat was signed on 23 rd October As per MOU, Border Haat would be established on Meghalaya Border Baliamari - Kalaichar and Lauwaghar - Balat at Meghalaya Border. Trade would be allowed in respect of a list of locally produced items. The mode of trade would be a barter system with the use of local currency permitted to the extent of 50 US $. Border Haats aim at promoting the well being of the people dwelling in remote areas across the borders of India and Bangladesh by establishing traditional system of marketing of local produce. The Haats would focus on importance of restoration of economic and commercial ties between the people living on either side of our Borders. The Border Haat at Kalaichar on India side and Baliamari on Bangladesh side has been inaugurated on 23 rd July 2011.Border Haat at Balat will be inaugurated shortly. There is a move to open more border haats.

4 (e) South Asian Free Trade Area (SAFTA) Further to boost trade facilitation, the Agreement on SAFTA came into effect from 1 st January 2006.The Phased Trade Liberalization programme under SAFTA became operational from 1 st January 2006.India, Pakistan and Sri Lanka are categorized as Non-Least Developed Contracting States (NLDCs) and Bangladesh, Bhutan, Maldives and Nepal as Least Developed Contracting States (LDCs). Afghanistan has become the eighth member of SAARC as an LDC member in Article 7 of the SAFTA Agreement provides for a phased tariff liberalization programme (TLP) under which, in two years, NLDCS would bring down tariffs to 20%, while LDCS will bring them down to 30%. Non-LDCS will then bring down tariffs from 20% to 0-5% in 5 years (Sri Lanka 6 years), while LDCS will do so in 8 years. NLDCs will reduce their tariffs for L.D.C. products to 0-5% in 3 years. This TLP would cover all tariff lines except those kept in the sensitive list (negative list) by the member states. The format of the TLP is given below for purposes of clarity: Phased reduction of tariff to By NLDCs By LDCs 20% % by % for NLDCs 0-5% for LDCs by by by do----- By Sri Lanka by The following initiatives have been taken by India under SAFTA so far:- i. India has notified reduction of tariffs on all items outside the negative list to zero per cent for LDC members of SAFTA with effect from , i.e. one year ahead of the stipulated three years. ii. The other component of trade liberalization is the requirement for the reduction of sensitive lists by the member countries. India has reduced the items in its sensitive list for LDCs from 744 to 480 items. iii. A web based portal providing detailed information on current and updated import policies in respect of various products imported into India has since been developed and provides a one stop knowledge base for exporters in the SAARC region exporting different products to India. The portal also called the Compendium is fully functional and freely accessible at the site address given below:- url:

5 iv. The SAARC Agreement on Trade in Services (SATIS) was signed in the sixteenth SAARC meeting held in April 2010 at Thimpu in Bhutan. This marks the first step in expanding the scope of the SAFTA agreement which is essentially a goods agreement at present. SAARC countries share the vision to create a common market where both tariff and non-tariff barriers are minimized. Through the South Asia Free Trade Agreement (SAFTA), it is expected that peak tariff rates should not be more than 5% for most of the tradable commodities between member countries of SAARC. India has already allowed zero duty access for the SAARC Least Developed Countries, for almost 97% of the total tariff lines. The balance 3% tariff lines are mainly concerned with textiles and agricultural commodities. The consultative process has been started to see how further liberalization can be done for this balance 3% tariff lines. The efforts to reduce the 20% sensitive lists by the contracting states has been agreed in the SAARC meetings. Further the schedule of commitments in the trade in services are being finalized through the negotiations. (f) Bilateral meetings are being held regularly with the Asian countries to facilitate trade

6 ANNEXURE-I Status Report of Integrated Check Posts (ICPs) S.no ICP Location Phase I Status of DER preparation, land acquisition, release of funds etc. 1 Attari (Punjab) ( India-Pakistan) The project cost of ICP Attari is Rs 150 crore, including cost of land, construction, scanners and other miscellaneous expenditure. The MHA team led by Director(Border Management)has visited Attari on for looking into progress of construction of ICP for making it operational by 31 st October Work commenced in February Expected to be completed by October Raxaul (Bihar) ( India-Nepal) The project cost of ICP Raxaul is Rs. 120 crore including cost of land, construction, scanners and other miscellaneous expenditure. The work was tendered and tender was approved for a price bid of Rs crores. Work has been allotted to the contractor. The work has commenced in April, It is expected to be completed in November, Jogbani (Bihar) The project cost of ICP Jogbani is Rs crore, excluding the land cost.

7 ( India-Nepal) Construction work has commenced on this ICP. It is expected to be completed in November, Moreh (Manipur) ( India- Mayanmar) The project cost of ICP Moreh is Rs. 136 crore including cost of land, construction, scanners and other miscellaneous expenditure.. The land has been acquired. DPR has been approved. Detailed Engineering Report (DER) for Moreh ICP is under preparation. 5 Petrapole( WB) (India- Bangladesh) 6 Akhaura (Tripura) (India- Bangladesh) The project cost of ICP Petrapole is Rs. 172 crore, including cost of land, construction, scanners and other miscellaneous expenditure. The Project cost, excluding the land cost, as per the DER, has been approved for crore. The work has been awarded to the contractor. The foundation stone has been laid by Home Minister on 27 th August, The project cost of ICP at Akhaura is Rs crore, excluding the land cost. Hon ble Home Minister unveiled the foundation stone on 17 th May, The work has been awarded to the contractor. 7 Dawki (Meghalaya) (India-Bangladesh) The project cost of the Dawki ICP was tentatively projected at Rs. 50 crores. However, after the actual cost would be known after the approval of the Detailed Engineering Report. This land had been acquired. DPR has been approved. The Detailed Engineering Report for the ICP at Dawki was discussed in the 26 th meeting of ESC held on 29 th April, It is under finalization.

8 Phase-II 8 Sunauli (Uttar Pradesh) (India-Nepal) The project cost of the Sunauli ICP was tentatively projected at Rs. 34 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. The State government has been requested to acquire land. 9 Rupaidiha (Uttar Pradesh) (India-Nepal) DPR has been approved. The project cost of the Rupaidiha ICP was tentatively projected at Rs. 29 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. This land had been acquired. DPR has been approved. 10 Hili (West Bengal) (India-Bangladesh) The project cost of the Hili ICP was tentatively projected at Rs. 78 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. The State Govt. has been requested to identify the land. 11 Sutarkhandi (ndia-bangladesh) (Assam) The project cost of the Sutarkhandi ICP was tentatively projected at Rs. 16 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. The State Govt. has been requested to identify the land.

9 12 Chandrabanga (West Bengal) (India-Bangladesh) 13 Kawarpuchiah (Mizoram) (India- Bangladesh) The project cost of the Chandrabangha ICP was tentatively projected at Rs. 64 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. The State Govt. has been requested to identify the land. The project cost of the Kawarpuchiah ICP was tentatively projected at Rs. 27 crores. However, the actual cost would be known only after the finalization of the Detailed Engineering Report. The State Government of Mizoram had been requested to identify the land. A bridge would need to be built across the river to connect the two countries.