The Hindu Business Line : Trading interest

In recent days, three points have emerged regarding India-Pakistan trade which suggest that, official policy in Islamabad permitting, bilateral commerce holds the promise of a quantum jump. The first is the size of the delegation the Pakistan Minister of State for Commerce, Mr Hamid Yar Hiraj, brought with him on a visit to this country. With 187 businessmen and industrialist, this is the largest-ever such contingent. What this suggests is that the interest in Pakistan in expanding bilateral trade with India is strong indeed, which is not surprising given the mutual business opportunities that exist on both sides. Perhaps, of more importance is the indication that the Pakistan Government is, at the moment, backing that interest, as suggested by the official stamp given to it.

The second point of note, as revealed by the Commerce Minister, Mr Kamal Nath, is the April-October 2006 period saw a 129 per cent increase in the two-way trade (touching $977 million) compared with the previous year, which by any standard is a sharp rise and certainly to the benefit of both countries. An important aspect of this achievement is that, as Mr Kamal Nath pointed out, the 87 per cent increase in Pakistani imports from India in 2005-06 was maintained in the April-October 2006 period (87 per cent), a trend that should be particularly welcomed by Islamabad which has always held that opening up its economy to its neighbour would result in, among other things, the Pakistani market being swamped by Indian goods and services. Indeed, the April-October 2006 figures show that India's exports accounted for as much as $789 million of the two-way trade against Pakistani exports of around $188 million. The third point — which, incidentally, can exacerbate Pakistan's import fears — relates to Mr Hamid Yar Hiraj's indication that some sort of a `breakthrough' can be expected at the forthcoming SAARC Ministerial meeting in Kathmandu on the contentious South Asian Free Trade Agreement issue of Islamabad not extending to New Delhi the mandated trade concessions already allowed to other members of the association.

It is not yet known what the precise content of the expected advance will be, but the least India should expect is that it will be accorded the Most-Favoured Nation status, which will allow bilateral trade to be based on a residual negative list instead of being governed by a permitted list, as is the case now. This, along with the improvement of transport infrastructure, would have at least one immediate beneficial impact — the regularisation of the unofficial (and inefficiently conducted) trade between the two countries, which is as high as 5-10 times the recorded exchange.

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