A week ahead of the meeting of the commerce secretaries of India and Pakistan, industry chambers today said increasing trade through third nation and lack of investment promotion pacts are impeding the economic ties between the two neighbours.
Industry body Ficci said that lack of direct trade between the nations has resulted in surge of informal trade.
"Trade through third countries is mainly conducted through agents operating in free ports like Dubai or Singapore and the Central Asian countries. The size of informal trade underlines the potential of bilateral trade between the countries," it said.
Ficci said Pakistan should also grant the status of Most Favoured Nation (MFN) to India. India has already granted this status to the neighbouring country.
The move will help New Delhi to push goods into its neighbour’s market and improve ties.
Echoing the view, PHD chamber said: "The major confidence building and trade enhancing measure would be Pakistan granting India the MFN status."
Ficci said lack of investment promotion and protection agreement between the two countries remains a stumbling block.
"There is a need to set up an institutional mechanism that would guarantee the safety of each other’s investments," Ficci added.
It said that India allows import from Pakistan of all but a few items in the negative list. On the contrary, Pakistan disallows exports from India in all but selected items in the positive list, thus, restricting bilateral commerce.
The chamber said Pakistan should follow the Indian model and open trade. As per Pakistan's positive list, India can export only 1,938 items.
Pakistan currently allows India to export items like meat, edible oil, cereals, tobacco, chemicals, fertilisers, leather, cotton, silk, coffee, tea and oilseeds.
Further, it said that both the countries should organise trade fairs and set up web portals to increase awareness about each other's competencies and business capabilities.
On visa issue, Ficci and PHDCCI said that both nations should ease the restrictions and work towards speeding up approval process for business visas. The move would facilitate movement of businesses.
Commerce Secretary Rahul Khullar and his Pakistani counterpart Zafar Mehmood are scheduled to meet on April 27 and 28 in Islamabad.
The composite dialogue between the countries was suspended by India after the Nov 26, 2008 attack.