New Delhi, May 30 (IANS): The union cabinet on Saturday approved the agreement on coastal shipping between India and Bangladesh for coastal movement of goods between the two countries.

"Exim trade between India and Bangladesh would be benefited by way of reduction in freight charges. It will also improve the utilisation of port capacities of Indian ports and open up new opportunity for Indian coastal vessels. It will also help in decongestion of roads especially at the land custom stations/integrated check posts at the Indo-Bangladesh boarder," an official statement issued here said.

The Indian ports serving as trans-shipment ports for Bangladesh cargo will derive benefits by way of enhanced throughput as a result of Indo-Bangladesh coastal trade, it said, adding that both the nations shall render the same treatment to the other country's vessels as it would have done to its national vessels used in international sea transportation.

India's trade with Bangladesh has grown rapidly during the past few years. Bangladesh is now India's largest trade partner in south Asia.

Currently, there is no significant cargo movement between the sea ports of Bangladesh and India as it is not profitable for the big ocean going vessels to operate between the ports of the two countries.

Therefore, to reduce the cost of shipping operations, a lower but pragmatic standard of vessel known as River Sea Vessel (RSV) has been prescribed for coastal shipping.

The RSV category has significantly lower construction and operation costs without compromising on safety. For Indo-Bangladesh coastal shipping, the RSV category of vessel has been agreed upon by both the countries.