India's offer of free transit will expand the regional and sub-regional market for Bangladesh's exporters since it would allow them to ship goods to countries such as Nepal and Bhutan, said officials, economists and businessmen. 

New Delhi has offered the free movement of goods facility via its territory during Prime Minister Sheikh Hasina's visit to the neighbouring country, according to the joint statement issued on September 7.

This means Bangladesh can export products to third countries such as Nepal and Bhutan through specific land customs stations, airports, and seaports of India.

If the facility is implemented properly, the pressure on Chattogram, which handles more than 90 per cent of Bangladesh's seaborne trade, will also lessen to a large extent.

The transit facility will also create scope for exporters to diversify markets and products, vital for Bangladesh as it is set to lose duty benefits in export destinations following the country's graduation to a developing nation in 2026.

"Bangladesh will gain a lot from the offer if it can be implemented properly," said Selim Raihan, executive director of the South Asian Network on Economic Modeling, a research firm.

"If exporters can carry goods to an Indian land port, seaport or airport in order to ship them to a third country, they will be able to save time and costs since Chattogram port is often congested and expensive. It will also reduce the pressure on the ports in Bangladesh."

Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, suggested Bangladesh accept the offer as it would directly open up new markets like Nepal and Bhutan.

"Moreover, Bangladesh will be able to send goods easily to Myanmar in the future. Our exports will receive a boost if the transit facility can be used."

The move will also increase people-to-people contact, which will translate into greater connectivity, trade and business, the entrepreneur added.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, thinks the transit facility will give greater market access not only to garment items, but also to other goods.

"Nepal and Bhutan will be the direct market for Bangladeshi goods such as garments, cement, and food items. It will help expand our export basket."

Currently, Bangladesh can't send goods directly to Nepal and Bhutan through India.

Now, Bangladeshi trucks and covered vans carry goods up to the land ports concerned. Nepalese or Bhutanese trucks then carry the them to their countries using India as both landlocked countries have land transit agreements with their bigger neighbour.

In the absence of direct routes, Bangladesh's exports to both Nepal and Bhutan have been negligible.

The shipment to Bhutan was $10 million in the fiscal year that ended in June, up from $7 million a year ago, data from the Export Promotion Bureau showed.

Exports fetched $106 million from Nepal, up from $69 million in the fiscal year of 2020-21.

Mahbubul Haque, additional secretary of the free trade agreement wing of the commerce ministry, also admits that the transit facility would bring positive benefits to Bangladesh.

"But the offer has to be analysed by the government as many issues are involved."

The Indian offer is, however, nothing new since it has been stated in the documents of the Bangladesh, Bhutan, India and Nepal Motor Vehicle Agreement.

The pact is yet to be finalised as the Bhutanese parliament has expressed reservations, while Nepal is also showing apathy in signing the deal, said Raihan, a professor of the Department of Economics at the University of Dhaka.

The economist thinks if two members of the BBIN agree on the free movement of vehicles, other members will also feel encouraged in activating the deal for greater regional trade.

Bangladesh already allows the transshipment of goods from India's mainland to its northeastern states. Recently, the trial runs for the transshipment of containers from the neighbouring country took place using Mongla and Chattogram ports.

Turning India's offer into reality will not be without challenges.

"A lot of coordination and cooperation is required among the ministries, the tax administration, and many other government agencies," Prof Raihan said.

Dhaka has already requested rail connectivity with Bhutan through the newly inaugurated Chilahati-Haldibari route. New Delhi has agreed to consider the request.

In order to make the route and cross-border rail links viable, India has urged Bangladesh to remove port restrictions, the joint statement also said.