India's Largest B2B Marketplace

One step at a time for Indo-Pak trade By B Shankar India-Pakistan bilateral trade took another big leap towards big positive growth when Pakistan last week added 302 more items for trade with India, taking the total number of items on its positive list for India to 1,075. India's bilateral trade with Pakistan has been growing fast in the last couple of years with exports from India to Pakistan amounting to $681.85 million in 2005-06 as against $521.05 million during 2004-05, a growth of 31 percent. Similarly, Pakistan's exports to India amounted to $177.48 million in 2005-06 as against $94.97 million in 2004-05, showing a good 87 percent growth. The new items added on the list included machinery, surgical items, plastic, iron and steel, chemicals and pharmaceuticals, raw materials and metals, diesel locomotives and textile machinery among others. The new move, coming after bitter wringlings over the trade liberalisation programme (TLP) with India under the South Asian Free Trading Area (SAFTA) programme, is expected to provide a major thrust to the rapid expansion of economic relations between the two nations. India has already granted a Most-Favoured Nation (MFN) status to Pakistan, while Pakistan continues to regulate trade through a list of items deemed tradeable with India instead of reciprocating the MFN mechanism. Even the new items added to the list will attract similar taxes and duties applicable on these items when imported from other countries. The decision of the Economic Coordination Committee, headed by Prime Minister Shaukat Aziz, of approving these additional items in the positive list came after the Havana round of talks between Prime Minister Manmohan Singh and Pakistan President Pervez Musharraf. Trade between the two neighbours has grown since they launched a peace process, but remains well below $1 billion a year, and under $2 billion including a black market trade mostly routed through Dubai. However, even though the number of import items have gone up to 1,075, that is still far from Pakistan's original commitment to allow tariff concessions on import of 4,872 items for imports from SAARC countries. Interestingly, there exists a huge volume of unofficial trade in such products as plastic goods, synthetic fabrics, melamine dinner sets, textiles and clothing, woollens, food items such as wheat, sugar, edible oil and vegetable ghee between the two countries. It makes better economic sense for both the nations to legalise this trade by formalising bilateral trade ties. There also exists a huge black market trade, which is mostly routed through Dubai. Indian industry leaders feel India can offer a vast market for Pakistan exports. Pakistan can export with advantage products such as cotton yarn and textile fabrics, leather products, surgical instruments, sports goods, electric fans, water coolers, vegetables and fruits, sugar etc. Pakistan is already exporting textile yarn and fabrics to India, which can also be accelerated.