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With India calling off Foreign Secretary level talks with Pakistan, uncertainty looms over revival of trade talks between the two countries.
The Commerce Ministry was optimistic about resuming talks as Prime Minister Narendra Modi, in a meeting with his Pakistan counterpart Nawaz Sharif, during the former's swearing in ceremony in May, had said that India was prepared to go for full trade normalisation with the neighbour based on the road map already agreed to by both countries.
A senior Government official told Business Line : “We were confident that the trade talks would resume as part of the composite dialogue process after the Foreign Secretaries meeting as the political bosses had already expressed their willingness in giving priority to economic issues. However, now we are back on uncertain turf”. It is clear that both sides give priority to trade, the official said adding “But trade cannot happen in vacuum. The political atmosphere has to be conducive. We certainly hope that the two countries will resolve their differences soon and we can resume talks.”
Trade tiesThe trade liberalisation process, which started in January 2011, has been in a limbo since early last year following violence along the Line of Control in Kashmir. Pakistan has already brought down the number of banned Indian goods to 1,209 items from about 6,000 while India has reduced duties sharply on a number of Pakistani products. But Islamabad is yet to extend the Most Favoured Nation status to New Delhi as promised in the trade liberalisation schedule — a move that will lead to the removal of all bans on Indian imports. “Once ban on all goods is removed, India will gain access into the Pakistan market in areas so far restricted to it — automobiles, pharmaceuticals, electrical machinery and steel. It would also lead to greater flow of investments between the two countries,” the official said.
The trade potential between the two countries is estimated at between $10.9 billion and $19.8 billion, according to a study by the Indian Council for Research on International Economic Relations. At present, bilateral trade is at an annual $3 billion, with the balance in favour of India.
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