DHAKA: Taking further the new government's stated objective of "good neighborly" relations, the Indian commerce department has circulated a draft Cabinet note that seeks to offer unilateral entry to vehicles from Bangladesh.

Prime Minister Narendra Modi has emphasized strengthening ties with neighboring countries. Modi also chose Bhutan as his first foreign destination after taking over as prime minister, reports Times of India on Friday.

It said that the government is of the view that giving access to vehicles from Bangladesh will encourage Dhaka to reciprocate the gesture, which will facilitate cross-border trade by reducing transaction costs and ensuring greater connectivity between the two countries.

At present, cargo vehicles from both sides are required to unload at the border check posts. The goods are then transferred and carried into the respective countries. 

Combined with the rapid growth in bilateral trade, which has crossed $5 billion, the requirement has led to massive congestion at the border, especially at the land Customs stations and integrated check posts. This, in turn, has led to a significant increase in trade transaction and freight costs, impacting both exporters and importers.

If Bangladesh too allows access, it would be a landmark move in enhancing trade facilitation in the region and easing infrastructural hurdles to trade with not just Bangladesh but the entire South-east region.

"We should see it as a good gesture. It is a more friendly approach towards our neighbors. But the ball will now be in Bangladesh's court to reciprocate," said Arpita Mukherjee, professor, ICRIER. "If Bangladesh gives access, the strategic gains for India will be tremendous as today we have very little connectivity.

This will open up the India-Bangladesh-Myanmar route to Thailand... a big infrastructural connectivity route will open up." The ministry of road transport and highways, which will be in charge of framing rules and protocol, had earlier noted that there must be clarity on whether unilateral access would translate into a bilateral agreement.

India and Bangladesh had earlier come close to signing a bilateral Motor Vehicles Agreement (MVA), which would have enabled vehicles from both sides to enter and ply within the other's territory. 

The two countries had agreed to work towards concluding the MVA when then prime minister Manmohan Singh visited Bangladesh in 2011and held talks with his counterpart, Sheikh Hasina. However, Bangladesh has not responded to the draft MVA till date, prompting the Indian side to act on it unilaterally.

This is not the first time India could propose unilateral support to a lesser developed country. Under the South Asian Free Trade Area (SAFTA) agreement, India had reduced its sensitive list from 868 to 614 products on which tariff concessions will not apply to Bangladesh. India provides a duty-free, quota-free access to all items barring just 25 products.

BDST: 1840HRS, JUNE 20, 2014