India, Pakistan seek to untangle trade knots: Agriculture

April 20, 2013

By Udayan Namboodiri for Khabar South Asia in New Delhi

India, Pakistan
India, Pakistan

Between April 2012 and February 2013, India’s exports to Pakistan reached $1.6 billion, up from $1.4 billion in the corresponding period the year before, Indian Ministry of Commerce spokesperson Jatin Kochar told Khabar South Asia.

In the same period, it imported $488m worth of goods from Pakistan, up from $375m the previous corresponding period.

“Though the size of bilateral trade is still modest – even in comparison to Bangladesh and Sri Lanka – the future is full of promise,” Kochar said.

According to Ministry of External Affairs spokesperson Syed Akbaruddin, trade volume between the two countries is the “highest ever”.

Among the facilitating steps taken so far is the liberalised visa agreement, which led to “unprecedented access” for business people in both countries, including the right to travel to five cities at a time.

“Three rounds of bilateral meetings and discussions of the Trade and Commerce Ministers of both countries held in September, 2011, February, 2012 and April, 2012 provided a strong political impetus to enhanced economic engagement,” Indian Commerce Secretary S. R. Rao told Khabar. “The transition towards full normalisation of trade relations with Pakistan was initiated by moving from a ‘negative list’ regime to a ‘positive list’ regime.”

In the past, inadequate infrastructure proved a bottleneck for smooth trade flows, forcing many Indians and Pakistanis to do business via third parties based in Dubai and Saudi Arabia. But the establishment of a new Integrated Check Post (ICP) at Attari, Punjab, has not only solved this problem, it has also increased opportunities for small business communities in both countries.

“We have directed customs and port personnel to harmonise procedures,” Rao said. “For this purpose, meetings are held every month with Pakistani Customs officers under the aegis of a Customs Liaison Border committee. A Land Customs station is operating seven days a week.”

A work in progress

Despite the largely positive news on bilateral trade, however, officials say a number of thorny issues must still be ironed out. These include a large trade imbalance in India’s favour, as well as Pakistan’s slowness to grant India Most-Favoured Nation (MFN) status, despite pledges to do so.

“India gave Pakistan MFN status back in 1996 in keeping with its WTO (World Trade Organisation) commitments,” said Gulshan Singh, an official with the Punjab and Haryana Chamber of Commerce. She added the issue will likely continue to be a sore point until Pakistan reciprocates the gesture.

S.M. Muneer, an official of Pakistan’s MCB Bank, told Khabar that his country is concerned about the possible impact on the domestic economy.

“There are lots of transparency issues,” he said. “Indian agriculture for instance gets a much larger subsidy than Pakistan can afford to give its farmers. But MFN status or not, the growth rate in bilateral trade is irreversible.”

Pakistanis also worry about the hefty trade imbalance. “This can be settled only if the two governments agree on involving small industries to invest in each other’s countries,” Muneer said. Source Khabar Southasia.

Published: Zarai Media Team

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