The Indo-Pak trade liberalisation process will officially re-start next week almost a year after talks were suspended following violence at the Line of Control.
Commerce Secretaries of both the countries are scheduled to meet on the sidelines of the SAARC trade Ministers’ meeting in New Delhi beginning January 17.
Commerce & Industry Minister Anand Sharma and Pakistan’s Minister of State for Commerce Khurram Dastgir Khan are also scheduled to hold a bilateral meeting at the SAARC event.
India hopes to be accorded the Most Favoured Nation (MFN) status by Pakistan as part of the trade opening process which will entitle it to export all products to the country.
Although Pakistan has removed ban on a large number of Indian products over the last two years, about 1,209 items including textiles, chemicals and automobiles, continue to be disallowed.
“We are hopeful that when Commerce Secretaries of India and Pakistan meet this month, they will be able to pick up the thread and move fast on the liberalisation agenda that is already in place,” a Commerce Ministry official pointed out.
Apart from lifting the ban on specific Indian items, the road-map for liberalisation also requires Pakistan to allow trade of all items through the Attari-Wagah land route. Pakistan allows just a handful of items to be traded through the land route that results in exorbitant transportation costs for the remaining products.
Once Pakistan moves on at least one of the two main areas, India has agreed to cut down tariffs substantially on all but 100 items imported from the country.
“This will be a big concession for Pakistan as it could export items like textiles to India at low import duties offered to other SAARC countries,” the official said.
The two countries started the negotiations to normalise trade ties in January 2011. Both sides have already made considerable concessions to each other that include removal of import ban on a number of Indian products by Pakistan and lowering of duties on specific items from Pakistan by India.
Pakistan, which earlier allowed imports of less than 2,000 items based on a positive list of items, now allows over 6,800 items from India.
The current bilateral trade between India and Pakistan is at a low $2 billion. But estimates made by research bodies like ICRIER state that it could grow several times once trade and non-trade barriers are removed.