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PM Modi's Bangladesh visit: 2 billion credit line gives India access to strategic Chittagong Port

For India to gain access to use the port is a big achievement both in economic terms, and also as an expression of greater trust with Bangladesh.

Last Updated: Jun 07, 2015, 10.30 AM IST|Original: Jun 07, 2015, 10.27 AM IST
(This story originally appeared in on Jun 07, 2015)
DHAKA: India and Bangladesh settled their prickly 4,096-km-long land boundary issue on Saturday. As Prime Minister Narendra Modi and Sheikh Hasina exchanged instruments of ratification of the land boundary agreement, far away in the enclaves on the India-Bangladesh border, the door opened for over 50,000 virtually stateless people to finally get a national identity. “We have resolved a question that has lingered since Independence. Our two nations now have a settled boundary ,“ said Modi after 22 agreements were inked between the two governments.

Of equal significance is an agreement that will allow Indian cargo vessels to use the Chittagong and Mongla ports in Bangladesh.

This has immediate connectivity benefits -Indian ships at present have to travel all the way to Singapore to offload cargo onto vessels that bring them back to Ban gladesh, typically taking 3040 days. With this agreement, their travel time will come down to a week. This will be the first time India and Bangladesh will utilize their common seas. An agreement signed with Bangladesh on Saturday allowing Indian cargo vessels to use the Chittagong and Mongla ports has huge strategic implications.

Chittagong port has been developed by China and is part of its famed “string of pearls“. Ostensibly a commercial port, it is believed that China could use it for strategic purposes, particularly since Beijing is also said to be developing a deep sea port off the island of Sonadia at Cox's Bazar. For India to gain access to use the port is a big achievement both in economic terms, and also as an expression of greater trust with Bangladesh.

Modi announced a $2 billion line of credit for Bangladesh to use for infrastructure, power, health and education projects. Making connectivity a big part in Saturday's agreements, Modi also announced “Power supply from India to Bangladesh will grow from 500 MW to 1,100 MW within two years.“ Modi, Hasina and Mamata flagged off two bus services that would connect northeastern states to Kolkata via Dhaka. Bangladesh would in turn be able to use Indian territory to access markets in Nepal and Bhutan.

Keeping the Teesta deal alive, Modi indicated a similar political process would be employed for that deal as well. “Our rivers should nurture our relationship, not become a source of discord.Water sharing is, above all, a human issue. It affects life and livelihood on both sides of the border. We have shown political resolve and mutual goodwill with the Land Boundary Agreement (LBA). I am confident that with the support of state governments in India, we can reach a fair solution on Teesta and Feni Rivers. We should also work together to renew and clean our rivers,“ he said. This was the only time Teesta was mentioned publicly, though sources said it figured in private discussions. India will open two new consulates in Sylhet and Khulna in Bangladesh, while Guwahati will see a new Bangladesh consulate in the coming months. Modi referred to the growing security cooperation between Bangladesh and India, as their coast guards signed an MoU, and both countries signed deals to combat human trafficking, smuggling and circulation of fake currency notes. Bangladesh has been a major transit point for fake Indian currency notes, and India hopes to plug this route.

For the first time, a neigh bouring country will have a specially designated economic zone only for Indian companies. Signing an agreement to allow an Indiaspecific SEZ would encourage Indian investment and give both countries a way to address the yawning trade deficit, explained foreign secretary S Jaishankar.

Briefing journalists later, Jaishankar said Modi and Hasina held talks for almost two hours, setting the agenda for the future. They also exchanged modalities on how the LBA would be implemented. “We have a lot of hard work ahead of us,“ he said. The shipping and the inland waterways agreements, he said, would enable direct regular shipping links and relieve congestion in land stations.

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