There have been a number of projects to upgrade railway networks over the past decade, however, problems remain. For example, India has moved to electrify tracks and convert from meter gauge to broad gauge to harmonize its system infrastructure (UNESCAP, 2001). Freight accounts for 41 percent of traffic units on India’s railway system, however, and in contrast freight accounts for 76 percent of traffic on China’s rail network.<sup>17</sup> Moreover, the types of rail gauge still varies among countries and regions.<sup>18</sup> The railways in India and Bangladesh suffer from “over-staffing, poor maintenance, and old rolling stock” (Subramanian and Arnold, 2001). Reportedly Bangladesh railways have a serious problem with maintenance especially in the parts of the country where flooding is a problem. Due to these and other factors, the railway sector has lost share to the road sector and exporters consequently limit use of railways.

# (3) Border Crossings and Customs

Border crossings most often include inter-related infrastructure and facilities such as customs clearance checkpoints, truck waiting areas, storage depots, rail yards, and loading or unloading areas at ports. The border crossing at Benepole is reportedly one of the most developed in the region with facilities for warehousing, well-developed services, and other facilities. In contrast, some border crossings do not even have customs facilities (Subramanian and Arnold, 2001). Problems arise when customs clearance centers are located far away from other border crossing facilities. For instance, the sanitary and phytosanitary testing laboratory in Calcutta is located one thousand kilometers from the customs facility at Birgunj, Nepal. Exporters have to pay additional fees for vehicle detention charges for weeks while waiting for test results (Karmacharya, 2002). This not only raises the costs but also clearly affects the quality of export products.

Poor management at customs is not a major constraint compared to the problems with ports and land transportation; however, there are costly delays in transactions in border crossings. Some of these delays are associated with the preparation of customs documents and inspections due to a lack of standard documents. At the India-Bangladesh border a consignment needs at least 22 documentations, more than 55 signatures, and minimum 116 copies for the final approval (RIS, 2004). Each country requires different documents, such as transit, export, and import declarations. Exporters must prepare separate documents at each side of the border. Furthermore, the region uses different product classification systems for commodities: the Standard International Trade Classification is used by Pakistan and the Harmonization System (HS) by other countries. (Krueger et al., 2004). This contributes to a general lack of transparency and problems in product classification in trade.

There are other administrative problems with customs that continue in the region.<sup>19</sup> They include limitations on staff working hours and lack of uniformly applied import duty rates, among others. Nontransparent inspection procedure in any country reduces efficiency and slows customs clearance times. As a result of these and other factors

> 17 Data are from 2002, communication with Simon Thomas, World Bank.

> 18 For example, most of the network in Eastern India is broad gauge (Subramanian and Arnold, 2001).

> 19For a more detailed description see Subramanian (2001).

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