India-Pakistan trade surges despite problems
Bilateral trade between the two neighbours has increased from $235.74 million in 2001-02 to more than $1 billion last fiscal year.business Updated: Apr 11, 2007 17:15 IST
Trade between India and Pakistan is surging despite problems in movement of goods and people.
Pakistan registered a six-fold hike in its exports to India in the last five years. It is expected to go up further with new trade concessions announced by India last week.
Bilateral trade swelled from $235.74 million in 2001-02 to more than $1 billion last fiscal year. The balance of trade remains in India's favour.
Trade analysts see further growth as Pakistan has expanded its positive list of import trade with India to include machinery/equipment, raw materials, chemicals and accessories of a number of manufactured items in great local demand.
Both countries have indulged in protectionism. Their governments are trying to remove the various barriers for smoother trade.
In recent times, India and Pakistan have opened banks in each other's territory, resumed shipping services and improved cross-border road and rail transport.
"Businessmen of India and Pakistan now trade almost 2,000 items in more than 25 categories," said Raees Ashraf Tar Mohammad, a member of the Pakistan Grocers Association.
"This has built mutual confidence and communication between businessmen. We book orders on telephone or fax and the rest of the formalities follow. In the last 10 years or so not a single dispute has been reported," the Daily Times quoted him as saying on Tuesday.
According to a trade analyst, the share of Pakistan's exports to India in overall exports increased from a mere 0.5 per cent in 2001-02 to 1.8 per cent in 2005-06.
"This is a six-time increase in Pakistan's exports to India in the last five years," an official of the Karachi Chamber of Commerce and Industry said.
Pakistan's exports to India have increased from less than $50 million in 2001-02 to about $300 million in 2005-06.
Simultaneously, Indian exports to Pakistan too surged from $186.52 million to $802 million, up from 1.8 percent to 2.8 percent Pakistan's global imports. In these five years the balance of bilateral trade remained in favour of India. In 2005-06, it rose up to more than $500 million.
"The deficit came as a rude shock to the commerce ministry in Islamabad," the newspaper noted.
In July 2006, when the commerce ministry notified to implement concessional tariffs under the South Asia Free Trade Agreement (SAFTA), India was omitted from the list of South Asian countries. Indian Commerce Minister Kamal Nath then issued a veiled threat at a conference at Kathmandu that India might review the tariff concessions offered to Pakistan under SAFTA.
"We are not withdrawing these tariff concessions," said the Indian high commissioner in Pakistan in the Karachi Chamber of Commerce and Industry in March. At the same time, he said, "India does have the option to take back all these tariff concessions if SAFTA was not implemented in letter and spirit. (That) we are not applying this option on Pakistan is another matter."
"Our trade relations with India are based on a positive list of 1,078 items," said Pakistan Commerce Minister Humayun Akhtar Khan.
India wants the most favoured nation (MFN) status that Pakistan has consistently refused, contending that it is a WTO (World Trade Organisation) issue where New Delhi can fight it out.
So far as implementation of SAFTA is concerned, the minister said that India could raise this issue bilaterally at the committee of experts or at the inter-ministerial committee level.
Pakistan is not happy with non-tariff barriers (NTBs) and the overall Indian trade policy. India's stand is that whatever the NTBs or other policy issues of trade, "these are not Pakistan-specific and are meant for global imports".
Despite these differences, the two countries have been helping each other over the last few years to overcome agricultural shortages.
Pakistan supplied chickpeas, pulses, grains and sugar when these were in short supply in India. India supplied onions, potatoes, pulses and other food items to Pakistan.
Market reports suggest that Indian experts are ready to work out a joint plan to exploit fisheries and export value-added fish products.
India's exports of engineering goods now exceed $10 billion. Pakistan meets its 25-30 percent requirements of engineering products from imports. India can be a good source of engineering products with freight advantage and relatively quick delivery and after-sales service