The Hindu Business Line : Indo-Pak grey market trade worth $965 m in 2005-06: Study

The grey market trade between India and Pakistan was higher by 37.85 per cent than the official trade between the two countries at the end of 2005-06, according to a study conducted by Assocham.

The official bilateral trade figure for the period was around $700 million, while the grey market trade is estimated at $965 million during the period, according to the study.

The reasons for increasing grey trade between the two countries are easier flow of goods and services due to a developed network of informal traders across borders and lower transaction costs, compared to the formal channels of trade, the study said.

In the unofficial route, traders do not have to go through procedural delays and administrative bottlenecks that increase their transaction costs. Therefore, the goods supplied are at relatively lower prices.

Also, goods coming through these channels do not bear the additional burden of duties, taxes, and tariffs that makes them costlier, the study added.

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