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Indo-Pak trade to leap forward

Pakistan and India trade will leap forward a great deal, in the wake of three crucial agreements signed in Islamabad last week. Projections differ, as officials estimate trade will rise to $6billion a year after three years. Business puts it as high as $10 billion a year.

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Published: Mon 1 Oct 2012, 11:51 PM

Last updated: Tue 7 Apr 2015, 12:27 PM

The agreements cover customs cooperation, mutual recognition definition and standards of items and redressal of trade grievances. The agreements which will facilitate bilateral business mechanism and ease difficulties relating to certification, licensing, and lab testing among other issues. Pakistan’s commerce secretary Munir Qureshi and his Indian Counterpart S.R. Rao, signed the agreements. In this seventh round of negotiations, they pledged to take a number of specific steps and set timelines for their implementation. The next round will take pace in New Delhi in April 2013 to review implementation of the agreements and expand the business cooperation still more. An additional bonus will be peace and friendship for more than 1.5 billion people of these two feuding countries. Still more bonus will be Pakistan’s private investment in India, and the two countries opening their commercial bank branches, across the border.

Energy-starved Pakistan has also been offered India-generated electricity and oil, and heavy electrical equipment. Sounds too good to believe because the two countries have thrice gone to war in the last six decades. But the larger business flows and job-generation may ensure that should not happen in future. New Delhi agreed to scale down Pakistan-specific restrictive trade list by 30 per cent to remove non-tariff barriers.

The two sides examined the options to establish 500 to 2,000 megawatt power plants in Pakistan, by India’s Bharat Heavy Electrical Limited company, as well as supply 5.0 mccfd natural gas to Pakistan. The two sides will also examine the possibility of establishing a 220KV power transmission line to supply power to Pakistan. New Delhi also offered to sell to Islamabad 100 railway locomotives which are sorely need to bring efficiency to the Pakistani railways.

India will reduce the list of restriction by 30 per cent after Pakistan notifies “removal of all restrictions “ on trade by the crucial Wagah-Attari land route that connects Pakistani city of Lahore and India’s Amritsar city.

The businessmen in the two countries have described these steps as “a major breakthrough, signifying mutually beneficial but long-awaited settlement of major issues.” These cover trade via land route, linking Islamabad and New Delhi by air services, removal of non-trade barriers, and cooperation in the fast expanding telecom sector. As of now, only 137 items are tradable via Wagah-Attari route. India and Pakistan have agreed to allow opening of each other’s banks in the two countries to finance and facilitate the trade expansion which they are sure will take place under the new arrangements. The banking regulators — State Bank of Pakistan, and Reserve Bank of India — will exchange, within the next two months, lists of branches to be established in each other’s country.

Pakistani Commerce Minister Makhdoom Amin Fahim, commenting on the new pacts was quite upbeat. He said, “the negotiations have progressed in line with our needs and plans, mainly shown by the gradual removal of bottlenecks.” Indian Commerce Secretary Rao says, “we have been assured that by end-October, Pakistan will significantly expand the list of items, tradable through the Wagah-Attari land route. The route will also remain operation all through seven days a week rather than six days, as at present.” It will ensure larger turn-over of tradable goods, more particularly of perishable goods like fruits, vegetables and other foods.

The two sides will expand and strengthen the border infrastructure at Wagah-Attari for greater road access. Joint Working Group of India and Pakistan will also meet in New Delhi In October to examine the possibility of opening up a Southren land route at India’s border city of Munabao and Pakistani border point of Khokhrapar.

Muneer said: “India has agreed to provide a level playing field to Pakistani exporters by bringing down its “Sensitive List,” by 30 per cent, under South Asia Free Trade Agreement (Safta)-signed under the orbit of South Asian Alliance for Regional Cooperation (Saarc). The arrangement will be implemented by end-2012. It will pave the way for Islamabad granting India the Most Favoured Nation (MFN) status. India will remove the restrictive items in consultation with Pakistan. India has a list of 614 items under Safta, which it will reduce to 100 by April, 2013. Pakistan, too, has a Sensitive List of 936 tariff lines, which will be cut to 100 within five years.

At present the two-way trade between India and Pakistan is estimated at $2.7billion a year, with balance heavily In New Delhi’s favour-a trend which is sure to persist. Iftikhar Ali Malik, vice-president of Saarc Chamber of Commerce & Industry said: “If trade restrictions are removed, the volume will rise to $10 billion a year.”

But, government officials are currently targeting a trade volume of $6 billion a year, in three years. But coming months will indicate how the business moves?

Views expressed by the author are his own and do not reflect the newspaper’s policy