On n the afternoon of 16 July an Indian Railways goods train carrying 74 containers full of maize for the UN's World Food Program slipped into the Sirsiya-Birgunj Internal Clearance Depot (SBICD). The arrival of 1,308 metric tons of cargo was a momentous occasion for Nepali trade and commerce. However, the ceremony, where the Secretary of Industry, Commerce and Supplies Dinesh Chandra Pyakural welcomed the Indian Railways rake into Nepal's first dry port, was overtaken by news of the budget, announced on the same day.

It had been a long time coming for this Rs 760 million World Bank-funded depot which was completed in December 2002. Nepal did not have the requisite laws to govern the operation of trains, and the application of Indian laws raised a risk of extra-territoriality which made politicians hesitant.

Just-departed Indian ambassador, Shyam Saran, went all-out for the project, and Nepali bureaucrats found the appropriate terminology in the agreement to get the terminal operational. The breakthrough was a reference to 'applicable laws' of the two countries which would govern the entry of Indian Railways trains 5.4km from Raxaul railway station and 400m into Nepal past the border point and bridge over the Sirsiya rivulet. A Nepali Railways Act is now awaiting action by the Deuba cabinet.

Spread over 16 hectares, the dry port has 7,105sq m of bonded warehouse and storage space for 1,600 containers. The soft opening of the SBCID is also to allow testing of the tracks and equipment which have lain unused for three years. The formal inauguration is expected sometime in the autumn, with the Bihar strongman and presently India's Railway Minister Laloo Prasad Yadav expected to be present.
The immediate benefit from the dry port is that it allows arrival of third-country goods via sealed container straight into Nepali territory without opening the cargo in Kolkata Port. The goods will now pass through Kolkata in sealed containers, with port officials just carrying out customary checks to ensure the seals have not been broken.

Documents such as bills of lading and invoices will no longer be required, and only copies need be provided 'for information', according to Himalayan Terminals, the company which runs the dry port. Once a ship arrives in Kolkata, containers in the Nepal-bound sub-manifest are simply marked for transshipment. The Indian Railways transport the containers to Sirsiya-Birganj, including the passage through Raxaul customs.

"We are expecting the savings in transit and transport costs between Kolkata and Birganj to be between 30-40 percent, plus the benefit from simplified paperwork and streamlined procedures will be immense," says Secretary Pyakural. An official estimate has it that Nepal will save $16.2 million a year by using railway instead of trucks from Kolkata.

Himalayan Terminals has the contract for ten years and is a joint venture between the parastatals Container Corporation of India (Concor) and the Nepal Transit and Warehousing Company, with the private Interstate Multimodal Transport run by the Rauniar family of Tahachal, a company with long experience in handling bulk and high-value cargo.

The biggest losers from the dry port's activation will be Indian truckers who handled transport from Kolkata port to points in Nepal. Indeed, even as the inaugural train was flagged off at the Netaji Subhas Dock on 12 July by Nepal's Consul General Yubaraj Bhusal, Kolkata-based truck operators were petitioning the West Bengal government against Concor for having initiated the container service. The loss to Indian truckers is a bonanza for Nepali transporters if they can augment their fleet of flatbed trucks required for containers.

Says Ras Bihari Rauniar, the Nepali partner in Himalayan Terminals: "There is not one aspect of the national economy that will not benefit by the efficiency and costs-savings from the clearance depot."

The dry port has opened up the tantalising prospect, finally, of Nepal's rail connectivity to the entire broad gauge system that crisscrosses the subcontinent, the biggest network in the world. While the present use of the Sirsiya-Birganj ICD is limited to the Kolkata and Haldia ports, there is little to stop Nepal from seeking access to other ports in India through the broad guage network, or to the Bangladesh ports of Mongla or Chittagong via the Rohanpur-Singhabad frontier of West Bengal. Both Chittagong and Mongla ports have offered 50 percent discount in services in order to attract Nepali business.

Himalayan Terminals is now working to coordinate track timings with Indian Railways to provide fixed departure and arrival times. Initially, it says the plan is for two trains a week from Kolkata and one train a week from Haldia. The time for cargo to arrive from from seaport to dry port once bottlenecks are cleared will be less than 48 hours, say officials.

The dry port will not by itself bring prosperity to Nepal. The country can take full advantage of containerised trade when it is able to export in bulk in the same way that it imports in bulk. This will require Nepali traders to evolve into producers of goods rather than exporters of repackaged third-country imports.

Business and government must collaborate in taking advantage of the link now available to the rest of the subcontinent. One can plan on extending the line to Bangladesh and even to cargo links to Pakistan via rail across the Wagah-Atari frontier. But before all that, India beckons.

There are also other points to ponder as we look towards an expanded economy through the dry port at Birganj-Sirsiya. Economist Posh Raj Pandey says there is urgent need to promote exports of the kind that would travel by rail, and ensure that the appropriate kinds of agreements are in place with India for this. At the same time, he cautions, "We must not fail to consider regional imbalances that may occur within Nepal if Birganj-Sirsiya is the only point with broad guage and a dry port."