SEAMLESS transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17 percent in Bangladesh and 8 percent in India, said a new World Bank report. Simple average tariffs in both nations are more than twice the world average, said the bank.

"In fact, it is about 15-20 percent less expensive for a company in India to trade with a company in Brazil or Germany than with a company in Bangladesh," the report points out, noting high tariffs, para-tariffs and non-tariff barriers.

Previous analysis indicates that Bangladesh's exports to India could increase by 182 percent and India's exports to Bangladesh by 126 percent if the countries signed a free trade agreement.

The new report found that improving transport connectivity between the nations could increase exports even further, yielding a 297 percent increase in Bangladesh's exports to India and a 172 percent increase in India's exports to Bangladesh.

"While trade between India and Bangladesh has increased substantially over the last decade, it is estimated to be USD 10 billion below its current potential,"  said Ms Mercy Tembon, World Bank Country Director for Bangladesh.

Weak transport integration makes the border between Bangladesh and India thick, crossing at Petrapole-Benapole border taking several days. In contrast, the time to cross borders handling similar volumes of traffic in other regions of the world, including East Africa, is less than six hours, the report highlights.

At present, Indian trucks are not allowed to transit through Bangladesh. As a result, the northeast of India is particularly isolated with the rest of the country and connected only through the 27-km-wide Siliguri corridor, also called the "chicken's neck." This leads to long and costly routes. Goods from Agartala, for example, travel 1,600 km through the Siliguri corridor to reach Kolkata Port instead of 450 km through Bangladesh.

If the border were open to Indian trucks, goods from Agartala would have to travel just 200 km to the Chattogram Port in Bangladesh, and the transport costs to the port would be 80 percent lower, the report estimates.

According to the report, all districts in Bangladesh would benefit from integration, with the eastern districts enjoying larger gains in real income. States bordering Bangladesh such as Assam, Meghalaya, Mizoram, and Tripura in the northeast, and West Bengal on the west, and States further away from Bangladesh such as Uttar Pradesh and Maharashtra would also gain huge economic benefits from seamless connectivity.