India on Friday laid the foundation stone for an inland waterway terminal in Varanasi and flagged off a trial run of two cargo vessels from Varanasi to Haldiya Port near Kolkata which touches Nepal’s two major rivers—Koshi and Gandaki.

As Nepal and India have already agreed to develop water navigation, according to observers, Nepal can also build facilities to use its rivers for cargo movement, which is believed to be cheaper than road or rail transport. The issue was widely discussed between the two countries in the 1990s but had failed to make headway.

The National Waterways Bill passed by the Indian parliament in April envisages converting 111 rives into a national waterway for cost-effective cargo transport.

The longest National Waterway 1 inaugurated on Friday will be on the Ganga from Haldiya to Allahabad stretching 1,620 kilometres. It will touch the Indian states of Uttar Pradesh, Bihar, Jharkhand and West Bengal. Nitin Gadkari, India’s minister for Shipping, Road Transport and Highways, flagged off the trial run of two cargo vessels from Varanasi to Haldiya. During the visit of Indian Prime Minister Inder Kumar Gujarel to Nepal in 1997, the two countries had agreed to start research on water navigation.

“The prime ministers of India and Nepal directed their officials to expedite a joint study of river navigation for the promotion of tourism and for facilitating transportation of cargo,” a joint statement read.

Varanasi and Raxaul are just 300km apart while the distance between Raxaul and Kolkata is 800km. Of late, India is asking Nepali officials to use Haldiya Port to import cooking gas and other goods. Nepal could build waterways to Bhgalpur from the Koshi river on a 200km stretch. Another possible route is to Patna along the Gandaki river. During Indian Prime Minister PV Narasimha Rao’s visit to Kathmandu in 1992, the two countries had “agreed to investigate and study the aspects of navigation through Koshi River”.

By 2018, India plans to ensure that at least seven percent of India’s goods traffic is moved by waterways. According to Gadkari, the waterways are the new frontier to bring down the logistical cost in India. The Bihar government, however, has protested the project saying that it would increase the possibility of flood in the state.

“Investments in waterways infrastructure will serve, besides sustainable transport, regional development and tourism. The neighbourhood first approach of the government will get adequate boost by developing India’s Inland waterways,” said Uttam Kumar Singh, a research fellow at the Institute for Defence Studies and Analysis, in an article published in The Nationalist Journal in May.