Dhaka: Bangladesh’s cabinet has approved a revised trade agreement with India allowing for the trans-shipment of goods through each other’s territories across land and water routes through a third country in the neighbourhood in a bid to remove a long-standing barrier to smoothening regional trade.

“This is a huge achievement for Bangladesh. Under the agreement we [Bangladesh] will now be able to use Indian roads, railways and waterways [for the] trans-shipment of goods to Bhutan and Nepal,” Cabinet Secretary M. Musharraf Hussain Bhuiyan said today.

Under the terms of the deal, India will also now be able to send goods to Myanmar through Bangladesh. The deal will be automatically renewed every five years if either of the countries don’t object.

A cabinet meeting chaired by Prime Minister Shaikh Hasina approved the revised agreement late on Monday night.

Commerce minister Tofail Ahmad called the deal “a milestone” in Bangladesh-India relations and added that the revised deal would be signed either during Indian Prime Minister Narendra Modi’s visit to Dhaka or Shaikh Hasina’s trip to New Delhi.

Identical treaties

Officials familiar with the process said Kathmandu and Thimphu already have identical agreements with India. However, Bangladesh’s trade with Nepal and Bhutan has been hindered for want of such a treaty with New Delhi.

Under the new deal, trucks from Nepal and Bhutan can enter Bangladesh through Indian corridors. Previously they were required to park at specific points along the Indian border where goods from Bangladesh would then be loaded.

Dhaka and New Delhi signed their original trade agreement in 1972 soon after the emergence of an independent Bangladesh. Under the terms of the deal, which had crucial Indian support but expired on March 31, trade could only be done between the two neighbours while India could transport goods to its seven north-eastern states.

Officials said the proposed deal would be in force for five years instead of the existing tenure of three years and the fees and charges would be fixed through discussions between the two countries.

“Bangladesh and India would pay the same fees for transporting goods. It’s a win-win situation for both sides,” the cabinet secretary said.

National Board of Revenue (NBR) officials meanwhile said revenue authorities, the shipping ministry and the roads and highways departments of both nations would soon sit to fix transit fees.

They said as far as Bangladesh-India trade relations are concerned, India exports goods worth over $5 billion (Dh18.36 billion) a year to Bangladesh through formal channels. It is also believed that products of equal value enter Bangladesh informally.

“The new deal will now earn a huge amount of revenue from India by allowing it access to Bangladesh territory,” an NBR official said.

Modi’s visit

In a related development, Sujata Mehta, the visiting Indian External Affairs Secretary for Multilateral and Economic Relations, said Modi would visit Bangladesh soon, adding that the visit is expected to yield “some good results”.

The Prime Minister’s press secretary Shamim Chowdhury said Mehta had made the remarks as she paid a courtesy call on the premier late yesterday.

Referring to the proposed second line of Indian credit (LoC) valued at $1 billion, Mehta said: “We could take more development projects under the [new] LoC.”

According to Chowdhury, Mehta said Bangladesh could invest or buy electricity directly from the hydroelectric power plants set up in north-east India and a “solar alliance” could be formed between the two countries.

He said the Indian external affairs secretary had revealed that three to four Indian companies were interested in investing in Bangladesh’s energy sectors.