Pakistan in talks with its industry to allow import of all goods from India

Pakistan’s Commerce Ministry is trying to persuade the country’s four key sectors — automobiles, pharmaceuticals, agriculture and polyester — to support its proposal to remove all existing bans on Indian products.

Extending India non-discriminatory market access, which basically means allowing all Indian items to be sold in Pakistan, is a key condition that New Delhi has laid down before Islamabad for re-starting the bilateral trade dialogue that has been stalled for the past year. Pakistan disallows 1,209 items from India.

“We are in talks with representatives of the automobiles, pharmaceuticals, polyester and agriculture sectors to convince them that allowing imports of these items from India will not necessarily result in loss of business for them. We could put in place a number of safeguards to prevent that,” a senior official from Pakistan’s Commerce Ministry told Business Line .

The number of Indian goods banned by Pakistan was much higher, at around 6,000, when the two countries started the two-way trade liberalisation talks in February 2012. Since then, Pakistan has increased the number of permitted items around three-fold.

However, a number of Indian items, mostly from the agriculture, automobile and auto parts, pharmaceutical and chemicals and the polyester sectors, are still not allowed access into Pakistani markets despite the country promising to do away with such bans by December 31, 2013. It had also promised that it would allow trade of all products through the land route, instead of the expensive sea-route.

The Indian Commerce Ministry, in a letter to the Pakistani Government last month, said it would hold further talks with the country only after it gives strict timelines for extending it non-discriminatory market access (by removing import bans) and allowing trade through the land route.

India’s automobile industry, especially the two-wheeler segment, pharmaceuticals producers and polyester makers are likely to find a ready market in Pakistan for their goods once the import restrictions go, as they are more competitive in a number of categories. India has no ban on Pakistani products and allows all imports.

The Pakistani industry, too, stands to gain substantially from the move, as it would then prompt India to bring down duties on a large number of Pakistani goods, including all kinds of textiles and garments, in line with what it offers to other South Asian countries. India-Pakistan bilateral trade is at present just above $3 billion, but, according to industry estimates, has the potential to touch $20 billion if normal relations are established. Pakistani Trade Minister Khurram Dastgir Khan recently put the blame on the two Foreign Ministries for the stalemate in talks. The talks got suspended last year following violence at the Line of Control.

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