24X7 Customs clearing fails to boost trade at Petrapole

“Baichung Parking” reads the sign on a gated compound near Bongaon on Jessore Road, approximately 10 km ahead of the Petrapole land border with Bangladesh. The owner must have been a fan of former Indian football captain Baichung Bhutia.

Inside the compound, nearly a dozen trucks are lined up. They are carrying export consignments to Bangladesh but detained due to heavy congestion at the entry point. There are numerous such private parking and warehousing facilities in Bongaon and more are springing up, indicating strong demand.

Nearly seven months since the introduction of round-the-clock Customs clearance by India and Bangladesh on August 1, there is no visible improvement in cargo movement at Petrapole-Benapole (Bangladesh) border, the most preferred route for bilateral trade.

At ₹18,501 crore, Petrapole-Benapole (Bangladesh) border accounted for 35 per cent of the $7.5 billion bilateral trade in 2016-17. While the total for 2017-18 is not known yet, trade through this gate increased marginally to ₹18,798 crore.

24X7 a failure?

Land port officials say that the pace of clearance has increased lately as nearly 450 trucks are currently entering Bangladesh a day as against 300 trucks year ago. However, that is very small compared to the daily arrival of 3,500 trucks with export cargo.

Moreover, much of the incremental volume of clearances reportedly went to serve a few in the name of priority cargo, claim Kartik Chakrabarti, representing the C&F agents’ association.

Ideally, perishables are due for preference treatment at the gates. But, beginning last year, Petrapole gives preference to 40-plus sealed containerised export cargo, mostly cotton fabric. Bangladesh insists on priority clearance for its import of truck chassis, approx. 100 a day.

In all, roughly, 200 consignments are now getting priority status, leaving a small window to serve majority exporters. Naturally, congestion is a rule here. And, many starting from Bomgaon Municipality to private parking lots, are making a killing. For an average detention of 10 days on Indian side of the border, trucks pay in excess of ₹4,000 as a parking fee. Extortion fees extra.

Nexus at Benapole

The source of the entire trouble seems to be in Bangladesh which suffers from capacity constraint to clear cargo. Bangladesh has invested in passenger terminal but its cargo operations are in dismal shape vis-a-vis modern cargo handling facilities on the Indian side.

While Indian land port ensures unloading of import cargo from Bangladeshi trucks in flat 12 hours, Indian trucks carrying export cargo are detained for six days on an average in Bangladeshi land port.

According to Indian users, infrastructure inadequacy and poor warehouse management are also to blame for the longer wait for trucks in Benapole.

The clue lies in tariff structure. The Indian land port charges ₹5,000 a day penalty for occupying space beyond 24 hours. Bangladesh didn’t introduce this progressive tariff and influential Bangladeshi importers use Benapole land port as a low-cost warehousing solution.

Commodities imported from India are often stored at Bangladeshi land port for months, allegedly to be cleared depending on domestic market conditions. International trade slows due to capacity constraint.

Professor Selim Raihan, Executive Director of the Dhaka-based South Asian Network of Economic Modelling (SANEM), points out that Bangladeshi land port suffers both from infrastructure inadequacy as well as poor utilisation of the existing resources.

This slow pace of clearing cargo and the resulting congestion, however, helps rent seeking. While private warehouses and parking bays thrive on Indian side, truckers allege that they are forced to pay ₹3,000-4,000 goonda tax in Bangladesh on every trip.

“The 24X7 Customs clearing makes little sense for general traders. Making Benapole cargo-handling efficient will pace up the trade,” said an Indian source.

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