The government yesterday included a rail route in the Bangladesh-Nepal's existing transit agreement to give a much-needed boost to bilateral trade by cutting distance.
The cabinet amended the existing transit protocol to add Rohonpur in Chapainawabganj as an additional transit entry and exit point for Nepal.
The amendment came as it gave the nod to the draft addendum to the protocol to the transit agreement.
"Because of the new route, trade between the two countries would increase," said Cabinet Secretary Khandker Anwarul Islam while briefing reporters at the secretariat.
Rail communications between the two countries would be established thanks to the new route.
"Both countries would be able to use it," the cabinet secretary said.
Bangladesh and Nepal inked the transit agreement and the protocol to the transit agreement in 1976 and identified six ports of calls for the movement of transport vehicles to and from Nepal.
The ports of calls were Khulna-Chalna (currently Mongla Port), Chattogram Port, Biral (Pashchimbanga, India), Banglabandha, Chilahati and Benapole.
But most of the products coming from Nepal use the Banglabandha port, according to the documents of the commerce ministry of Bangladesh.
Two routes have been proposed as the new rail link. The first one is Rohonpur-Zero Point-Singabad (Pashchimbanga)-Jogbani (Bihar)-Birat Nagar (Nepal).
The second one is Rohonpur-Zero Point-Biral (Pashchimbanga)-Radhikapur (Pashchimbanga)-Roxol (Bihar)-Birgunj (Nepal).
Nepal is interested in using the first route as it involves a distance of 217km compared with the 514km of the second route, according to the commerce ministry.
In January 2010, the prime ministers of Bangladesh and Nepal agreed to include Rohonpur-Singabad broad gauge railway link as the additional transit route.
In September, the addendum to the letter of intent between Bangladesh and India allowed the use of rail network as a new transit route to facilitate overland transit and tariff between Bangladesh and Nepal.
Kathmandu signed a letter of exchange with New Delhi in February 2016 to use Singabad to expand trade with Bangladesh.
Nepal requested Dhaka to add Rohonpur as the seventh port of call during the fourth Nepal-Bangladesh commerce secretary-level meeting in Kathmandu in June 2018 and sent a letter of exchange on 16 April last year.
Broad gauge rail network from Biratnagar to Singabad was introduced in 2004. But there was a metre-gauge track on Bangladesh's part.
Bangladesh put in place broad gauge track in 2015. However, no significant exports took place through the route.
In 2017, Best Trade, the last company to use the route, exported 35,000 tonnes fertiliser to Nepal.
Because of the lack of direct land connectivity, trade between Bangladesh and Nepal has been very low.
Bangladesh exported goods worth $38.1 million to Nepal in fiscal 2018-19, up from $10.8 million in fiscal 2010-11, data from the commerce ministry showed.
In fiscal 2018-19, Nepal's exports stood at $9.9 million, down from $49 million in fiscal 2010-11.
Nepal also wants to use the Saidpur airport. The commerce ministry would soon come up with a proposal to this effect, the cabinet secretary said.
The cabinet also approved the draft agreement between Bangladesh and the Maldives aimed at avoiding double taxation and preventing tax dodging and gave consent to a similar deal with the Czech Republic.
The agreements would accelerate trade and woo investment, Islam said.
Bangladesh currently has double taxation avoidance agreements with 36 countries.
It gave a go-ahead to a draft proposal to strike an agreement on cooperation and mutual assistance on customs with Saudi Arabia.
The deal is expected to facilitate sharing customs-related information and prevent smuggling.