Pakistan India Trade: Present and Future
Presently around three to four billion dollars informal trade is still going on between all the seven member states of Saarc. Out of this Pakistan and India exchange goods to the tune of $1 billion per annum through traditional sources like cross border smuggling and personal baggage.
Even though both countries are members of the South Asia Free Trade Area (SAFTA) established in January 2006, trade between the two countries is unnaturally small .
Total trade (exports plus imports) between India and Pakistan in 2008 amounted to a little more than US$2 billion.
Total trade levels (exports plus imports) between India and Pakistan could expand from its current level of US$2.1 billion to as much as US$42 billion if the ‘normal’ relations were to hold for the two countries.
What then is holding trade back between the two countries? Constraints on economic integration include high tariff and nontariff barriers, inadequate infrastructure, bureaucratic inertia, excessive red tape, and direct political opposition.
India’s tariff rates remain high, especially for goods of particular interest to Pakistan, such as textiles, leather, and the mineral onyx, and nontariff barriers are substantial.
Also Pakistan maintains a fairly narrow positive list (of about 1400 items) on goods that India may export to Pakistan.
In October 2011, authorities plan to open a second trade check-post at the Wagah border in Punjab state, the only land-crossing between the two hostile neighbors, in an attempt to boost trade volumes.
While India’s trade with China has skyrocketed to $60 billion, the two-way India-Pakistan trade was a paltry $1.8 billion in the year ended March 31, 2010, basically unchanged over the past five years,
The new check-post is a good start. Indian officials estimate two-way trade could easily jump to $2.7 billion in the short term. But there won’t be a seismic shift in trade volumes until both countries make serious efforts to expand the list of products that they can trade with one another.
This year and for the first time in 35 years, a Pakistani commerce minister led a business delegation to India last week. The entourage included nearly 80 leading industrialists, traders and high-ranking officials. There, leading Pakistani traders got a chance to mingle with their equally eager-for-business Indian counterparts.
India and Pakistan on Wednesday agreed to jointly work towards doubling the bilateral trade to $6 billion annually from the current level of $2.7 billion by 2014. They also decided to put in place a liberalised visa regime from November 2011 for business communities of both nations.
Pakistan committed itself to a road map to implement preferential trade ties with India, as prescribed under the South Asia Free Trade Agreement (Safta). The new business visa regime is expected to allow multiple-entry and could be for a period up to one year.
Despite granting Pakistan the MFN status, India has a variety of non-tariff barriers in place - such as, stringent certification codes, customs rules, security clearances and movement restrictions - which make it virtually impossible for Pakistani traders to do business in India.
Sources:
thenews.com
PakistanToday
BBC News
The Hindu.com
commerce.nic.in
WSJ
EastAsiaForum
Pakissan.com
Presently around three to four billion dollars informal trade is still going on between all the seven member states of Saarc. Out of this Pakistan and India exchange goods to the tune of $1 billion per annum through traditional sources like cross border smuggling and personal baggage.
Even though both countries are members of the South Asia Free Trade Area (SAFTA) established in January 2006, trade between the two countries is unnaturally small .
Total trade (exports plus imports) between India and Pakistan in 2008 amounted to a little more than US$2 billion.
Total trade levels (exports plus imports) between India and Pakistan could expand from its current level of US$2.1 billion to as much as US$42 billion if the ‘normal’ relations were to hold for the two countries.
What then is holding trade back between the two countries? Constraints on economic integration include high tariff and nontariff barriers, inadequate infrastructure, bureaucratic inertia, excessive red tape, and direct political opposition.
India’s tariff rates remain high, especially for goods of particular interest to Pakistan, such as textiles, leather, and the mineral onyx, and nontariff barriers are substantial.
Also Pakistan maintains a fairly narrow positive list (of about 1400 items) on goods that India may export to Pakistan.
In October 2011, authorities plan to open a second trade check-post at the Wagah border in Punjab state, the only land-crossing between the two hostile neighbors, in an attempt to boost trade volumes.
While India’s trade with China has skyrocketed to $60 billion, the two-way India-Pakistan trade was a paltry $1.8 billion in the year ended March 31, 2010, basically unchanged over the past five years,
The new check-post is a good start. Indian officials estimate two-way trade could easily jump to $2.7 billion in the short term. But there won’t be a seismic shift in trade volumes until both countries make serious efforts to expand the list of products that they can trade with one another.
This year and for the first time in 35 years, a Pakistani commerce minister led a business delegation to India last week. The entourage included nearly 80 leading industrialists, traders and high-ranking officials. There, leading Pakistani traders got a chance to mingle with their equally eager-for-business Indian counterparts.
India and Pakistan on Wednesday agreed to jointly work towards doubling the bilateral trade to $6 billion annually from the current level of $2.7 billion by 2014. They also decided to put in place a liberalised visa regime from November 2011 for business communities of both nations.
Pakistan committed itself to a road map to implement preferential trade ties with India, as prescribed under the South Asia Free Trade Agreement (Safta). The new business visa regime is expected to allow multiple-entry and could be for a period up to one year.
Despite granting Pakistan the MFN status, India has a variety of non-tariff barriers in place - such as, stringent certification codes, customs rules, security clearances and movement restrictions - which make it virtually impossible for Pakistani traders to do business in India.
Sources:
thenews.com
PakistanToday
BBC News
The Hindu.com
commerce.nic.in
WSJ
EastAsiaForum
Pakissan.com
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