Saarc nations advised to lift embargoes, speed up trade
World Bank estimates that India, Pak annual trade can climb to $9 bn, if barriers are lifted, Gaurav Choudhury.india Updated: Apr 03, 2007 23:08 IST
The World Bank has called for closer regional cooperation among member countries of South Asian Association of Regional Cooperation (Saarc) and has estimated that annual trade between India and Pakistan can climb to $9 billion if barriers were removed.
According to a World Bank study - South Asia: Growth and Regional Integration - South Asia is the least integrated region in the world. Intra-regional trade is less than two per cent of gross domestic product (GDP), compared to more than 20 per cent in East Asia.
Annual trade between India and Pakistan, the bulk of which is routed through Dubai, is currently estimated at $1 billion, but could be as high as $9 billion if barriers are removed.
Although South Asia has significantly reduced import tariffs, the cost of cross border trading is among the highest in the world. “Crossings between India and Bangladesh are so heavily congested that queues often exceed 1,000 trucks on the Indian side, resulting in the crossing time taking around 99 hours instead of 21 hours. Trade can more than double if appropriate regional agreements on roads, rail, air, and shipping are made,” the study said.
Praful Patel, World Bank Vice President for the South Asia region, said that the intra-regional trade in South Asia can increase to $20 billion by 2010 if the trade barriers are lifted. “Benefits from energy trade can also be huge. Nepal has the potential to produce more than 40,000 megawatts of hydropower, most of which could be exported to India, generating revenue of $6 to $10 billion per year to Nepal,” said Patel.
World Bank Chief Economist for the South Asia region, Shantayanan Devarajan said that the regional cooperation would play a crucial role in meeting the infrastructure needs of the region. “Better trade facilitation would substantially reduce the transportation cost of intra-regional trade. Many of the region’s competitors have reduced customs and port clearance times. South Asia risks being left behind,” said Devarajan.
The World Bank said that firm level surveys of investment climate have identified infrastructure, particularly power, as a major constraint to growth in South Asia. In Pakistan, the typical business estimates that it loses 5.6 per cent in annual sales revenue owing to power outages against a reported loss of two per cent by its Chinese counterparts.