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Business News

Trade potential making India, Pakistan lift barriers

Monday - Feb 20, 2012, 04:32pm (GMT+5.5)
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Islamabad -  It is not often that some 150 of India's top corporate leaders visit Pakistan. And when that happened last week, led by Commerce Minister Anand Sharma, it had the desired  impact.

He was also the first Indian trade minister to visit Pakistan in more than three decades. Islamabad attached a lot of importance to the visit -- Sharma's host and Pakistani counterpart  Makhdoom Mohammad Amin Fahim was at the border to receive him.

Realising the potential the two sides hold for bilateral trade -- estimated now at $2.7 billion officially, and some five-times more routed through third countries -- they decided it was time to  move ahead and make it easier for at least commerce to flourish.

Given the long history of conflicts and distrust, there were no expectations from either side of an overnight change in relations. But the beginning was good -- visible during the meetings  between business leaders in Lahore, Karachi and Islamabad.

"Ours is a history of missed opportunities. We certainly don't want to leave behind the same environment for our children," said Sharma.

"This is, indeed, a big step forward in normailising business relations between two neighbours," the minister told IANS here.

The visit was a high-point of the slow but steady progress that was being made over the past 10 months to strengthen trade and business ties beginning with the secretary-level talks in Pakistani capital, and another round in New Delhi.

An important outcome last week was Islamabad's commitment to grant most-favoured nation (MFN) status to India by the end of this year -- which will pave the way for Pakistan to import  four-times many more items from India.

India granted a similar status to Pakistan in 1996.

"We have prepared a roadmap -- a roadmap we are going to have a very good business and economic relations with India," Pakistan’s Commerce Minister Makhdoom Mohammad Amin Fahim

said, adding easier business visa and import norms were a part of this agenda.

The five-day visit, which also covered Pakistan's commercial capital and port city of Karachi and Lahore, besides Islamabad, gave an opportunity for people to see one of the largest "India  Shows" and attend several business conclaves.

The business delegates were visibly pleased by the outcome at these meetings.

“It’s not peace that leads to trade -- but it’s trade that leads to peace,” said R.V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry (Ficci).

Some of the tangible results were:

- Commitment to finalise by next month easier visa norms

- A dedicated Attari-Wagah gate by April 30 to facilitate movement of goods

- Look at export of petroleum products to Pakistan by Indian refineries

- Promise to look into investments by Pakistani businesses in India

- Look at reciprocal possibilities of Pakistani and Indian banks opening branches

India's trade with Pakistan is just 0.5 percent of its total global trade. This is a far cry from 1947 when the two nations gained independence. India's trade with Pakistan then accounted for  nearly 60 percent of its global engagement.

“As neighbours, we should be natural trading partners,” Sharma said adding this was reflected in the large volume of informal trade the businesses of the two sides engage in through third  countries and illegal routes.

“There is no official figure but informal trade would be probably five times more," said Sharma, referring to actual recorded figure of $2.7 billion in 2010-11 in which exports from India were  valued at $2.3 billion and imports at around $400 million.

Looking forward the next few months are going to be busy, going by the commitments made. Officials from Indian and Pakistani central banks are to meet in Mumbai early next month to  finalise the modalities for opening bank branches on reciprocal basis.

The first meeting of the expert group on trade in petroleum products will also be held in March in New Delhi to facilitate the export of transport fuels to Pakistan. There will also be a meeting  of working group on trade in electricity in Lahore next month.

The commerce ministry also told the Pakistani side that it has already requested the finance ministry to consider foreign investment from Pakistan and bring about all the necessary changes  changes in the Foreign Exchange Management Act (FEMA).

On its part, Islamabad said it will move from a positive to negative list on items of import from India -- which means, only those items that are banned will be listed and all the other products  can be freely imported.

These were not outcomes that can be brushed aside, business leaders said. Even the joint statement issued by Ministers Sharma and Fahim said reflected the business and political  leadership of the two sides had lent their unequivocal support to normalising ties.

Indeed, as the statement said: "Accompanied by more than 100 business delegates, this visit marks a historic moment for both the countries."


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