A silent revolution in border trade

It is widely presumed and perhaps accepted that South Asian countries sharing geographical borders face special problems and challenges in a regional economy that is heavily fragmented by trade and transportation barriers. Freedom of movement of trade and transportation purposes is still limited in the region.

In other words, crossing the borders is a costly affair. However, to our utter surprise, change happened.

A colonial hangover did not change till 2012 when India came out of the status quo and opted for a reform by setting up the Land Ports Authority of India (LPAI) through an Act in Parliament in 2010 under the Ministry of Home Affairs.

This is the first time the concept of land port was officially acknowledged in India this way: ‘Land port’ means an area on the international borders of India including portions of national, State highways and other roads, notified as land Customs station or immigration check-post under the Customs Act, 1962 (52 of 1962) or the Foreigners’ Act, 1946 (31 of 1946), and includes railways, with facilities for clearance and transport of passengers and goods across the borders of India.

The entire ecosystem of India’s border management for the trade transaction purpose is now transformed into an improved frontier, which is very much in sync with the obligations of the WTO Trade Facilitation Agreement being implemented by India.

The history

Set up in 2012, LPAI has developed till date a total of nine ICPs, which are located across India’s international land border. These are Attari — handing India’s trade with Pakistan; Agartala, Petrapole, Srimantapur and Sutarkandi — all handling India’s trade with Bangladesh; Raxaul and Jogbani — both handling India’s trade with Nepal; and Moreh — handling India’s trade with Myanmar. Several new ICPs are coming up and their total number is likely to touch 24 by 2030.

Barring managing the ICP properties, what exactly is the role of a LPAI? LPAI has a wide mandate. It develops, sanitises and manages the facilities for cross-border movement of passengers and goods at designated points along the international borders of India. LPAI puts in place systems, which address security imperatives at the integrated check posts on India’s border.

Theory suggests that trade and infrastructure have a self-reinforcing relationship, in that higher infrastructure spurs a larger volume of trade flows.

This is well-captured in the accompanying statistical table. As India continues to strengthen its border infrastructure, the share of ICPs in India’s trade with her immediate neighbours (BBMNP countries) sharing borders has gone up from 41.87 per cent in 2012-13 to 63.59 per cent in 2020-21.

In value terms, ICPs trade increased from ₹327 billion in 2012-13 to ₹954.89 billion. The output shift is exceptionally high: ₹6.55 crore per vehicle in 2012-13 to ₹23.57 crore per vehicle in 2020-21.

The achievements

While speaking to Aditya Mishra, Chairman, LPAI, about the achievements of the Authority since establishment in 2012, he said, “Since the inception of the first ICP in Attari in 2012, LPAI has facilitated cross-border trade worth nearly ₹4.7-lakh crore across all its operational ICPs.

“Not just in terms of trade, given the importance of close, historical and ethnic ties that bordering States in India have with their neighbouring countries, LPAI has played an instrumental role in creating a truly seamless passenger experience by facilitating cross-border passenger movement of over 1.26 crore people.”

To strike a balance between security and trade facilitation, LPAI provides a wide range of security equipment like handheld metal detectors, door frame metal detectors, barriers and rotary mirrors which discourage manual frisking and verification by security forces at Land Ports.

Trade infra upgrade

Additionally, LPAI is in the process of enhancing and upgrading cross-border trade infrastructure at land borders by providing Access and Surveillance Control Systems, Full Body Truck Scanners for non-intrusive scanning and Radiation Detection Equipment at its ICPs which shall considerably reduce dwell time at ports. However, once some of India’s connectivity corridors such as the Trilateral Highway become operational, ICPs, particularly serving in our eastern neighbourhood, require further capacity expansion.

LPAI’s ICP model has been replicated by India’s neighbours like Nepal and Bangladesh, and offers many important lessons to African countries. ICPs in India have proven to be instrumental in channelising informal trade to formal trade. This model can be replicated at several African land ports which experience large informal trading activities having severe implications on the functioning of its economies.

For instance, in the case of trade between Benin and Togo, recorded formal trade is low whereas there is heavy incidence of unofficial third-country imports transiting through Togo and Benin and smuggled into Nigeria. These practices can be curbed if Integrated Check Posts with new-age surveillance technologies are built across the land borders.

As India ramps up border infrastructure to cope with the ongoing pandemic related challenges, reducing the costs of crossing borders in a timely manner has become a top priority. Safe and secure border is sine qua non for enhanced trade and integration.

The writer is Professor, ASEAN-India Centre, Research and Information System for Developing Countries (RIS), New Delhi. Views are personal