India on Friday approved a revised shipping protocol with Pakistan to give a fillip to trade and the bilateral composite dialogue process overshadowed by charges of Islamabad’s terror links.
The Union Cabinet chaired by Prime Minister Manmohan Singh approved the revised protocol on Friday. The revised protocol will improve upon the 1975 vintage protocol that was agreed three decades ago pursuant to the Shimla Agreement.
The protocol was then touted as a confidence-building measure; the two governments rescinded restrictions on the entry of merchant vessels of their countries to each other’s ports. But it was widely seen to have been aimed at restricting shipping and trade links.
The 1975 protocol prohibited Indian ships from lifting cargo from Pakistan to any country other than India. Similarly, Pakistani ships could not carry cargo from Indian ports to any third country. Such restrictive clauses worked to the detriment of shipping concerns on both sides of the border by restricting them to lifting only bilateral cargo, which is insignificant.
This, in turn, impacted the capacity utilisation for a service run either by an Indian or a Pakistani flag vessel, as an Indian vessel cannot pick up cargo for, say Colombo, from Karachi. This protocol, however, ended up benefiting vessels belonging to third countries since they fell outside the purview of the protocol.
“The revised protocol will allow lifting of cargo between the two countries by third country vessels as well as lifting of third country cargo by Indian and Pakistani flag vessels from each others' ports,” Information and Broadcasting Minister PR Dasmunsi announced after the meeting.
“This is expected to enhance tonnage under both flags and also result in competitive shipping rates,” he added. Officials hinted that non-tariff barriers like visa regulations would also be brought down as part of the new protocol.
Dasmunsi said Indian exports to Pakistan had registered a 167 percent growth between 2001-02 and 2004-05, rising from Rs 8.54 billion to Rs 22.88 billion. Imports from Pakistan had risen 42 percent in the same period from Rs 2.92 billion to Rs 4.70 billion.
Dasmunsi said the protocol would be signed at a “mutually convenient date”. According to reports, the protocol - already cleared by Pakistan's Cabinet - was initially slated to be signed in March this year.
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