Exporters and importers, he said, “confused” that each ship between India and Bangladesh should be only 6,000 GT. “It`s not fair,” he said. To further improve trade, an agreement was signed in October 2018 on the use of Chittagong and Mongla ports in Bangladesh for trade in Bangladesh and to India. India and Bangladesh have reached a cabotage agreement to expand trade between the two nations. Bangladesh is India`s largest trading partner in South Asia. The opening of the coastal road between India and Bangladesh should provide an alternative route for transporting Exim freight between the two countries. Therefore, in order to reduce the operating costs of the vessels, a lower but pragmatic standard was imposed for the vessel known as the River Ship (RSV) for coasting. In the past, freight between countries passed through the ports of Colombo/Singapore/Klang. But the agreement allowed for the regular direct transport of ships between India and Bangladesh and reduced the delivery time from 25 to 7 days, with an estimated saving of about $300 per container for the Chittagong Krishnapatnam container service.
The agreement runs until June 2020, but is being revised before being renewed for a further five-year period. “The question of whether foreign vessels with a larger (unrestricted) GT with equivalent safety certificates can move between the seaports of the two countries can also be negotiated to extend the benefits of mooring fees and priority tariffs to these vessels,” said a Ministry of Navigation official. The Indian Ministry of Navigation now believes that “the limitation of the size of the vessel should be dictated by the route itself and not separated by tonnage.” For example, ships sailing between Chennai and Chittagong offer an economical service for large vessels. The coasting pact currently allows vessels with a gross tonnage of up to 6,000 (GT) due to size restrictions imposed by the River-Maritime Vessel (RSV) rules established separately by the Directorate General of Navigation and the Ministry of Navigation in Bangladesh. This is because Article II of the pact signed on 6 June 2015 only covers Indian and Bangladeshi-flagged vessels that meet RSV or equivalent standards for the operation of services between the two countries. India and Bangladesh signed an agreement on coasting on 6 June 2015. The standard operating process (SOP) between the two countries was also signed on 15 November 2015 to implement the cabotage agreement. The agreement aims to promote trade between India and Bangladesh through their respective ports. Hosting the cabotage between India and Bangladesh will increase bilateral trade between the two countries and reduce Exim`s freight transportation costs, according to the statement. Under the agreement, shipping from India to Bangladesh is considered a coastal transport, so it is cancelled for 40% of the concession to collect shipping and freight charges. India is trying to lift the limit on the size of ships sailing between India and Bangladesh as part of the coasting agreement signed between the two neighbours in June 2015, as the pact is expected to be renewed next year. In this context, India signed a coasting agreement with Bangladesh in June 2015.
In November 2015, the Standard Operating Procedure (SOP) was also signed between the two countries to implement the coasting agreement. Indian Prime Minister Narendra Modi revived trade agreements signed in 1974 by former Prime Minister Indira Gandhi, and late last year the two countries signed a standard procedure for bilateral trade.