The visit of the delegation of Indian businessmen to Pakistan under the leadership of Anand Sharma, commerce minister, is a landmark event that can lead to a series of small steps over a period to increase the trade between the two countries.
In this visit, the achievements may appear to be modest. A Customs cooperation agreement has been signed to avoid arbitrary stoppage of goods at each other’s ports, another for acceptance of certificates of internationally accredited laboratories and a third for removal of grievances in case of any disagreement. The much awaited negative list did not materialise but the Pakistan commerce minister has assured that by end February, the negative list of items that cannot be imported from India will replace the present positive list of 1,945 items allowed to go from India to the neighbouring country.
The visit, however, signifies a confidence in both the countries that resistance to freer trade between the two countries is petering out. In both countries there are extremist elements that do not favour normalisation of trade relations. Their influence seems to be on the wane.
If the trend persists, more relaxations, such as multiple entry visas for businessmen, will follow and more areas identified for co-operation. The Pakistan government has already decided to extend Most Favoured Nation treatment to India.
Even among Pakistanis who favour freer trade with India, there are concerns that trade balance is in India’s favour and that India has not done enough to dismantle trade barriers, especially of textiles. Sharma has assured India is committed to removing barriers that restricted trade with Pakistan. He has also talked of trade in electricity, trade in petroleum products, opening up more land routes, banking licences and so on.
The idea is to move towards doubling the modest trade between the two countries in the next three years and explore avenues for more economic co-operation in the areas of services trade and investment.
Few expect India and Pakistan to normalise trade relations fully soon. But, very quietly, both countries appear to have resolved to keep the enhancement of economic ties separate from the political or military considerations.
The basic approach of keeping economic cooperation separate from politics seemed to find expression in Sharma’s statement that India would send a trade delegation in March to Iran to explore business opportunities despite sanctions imposed by the West.
The policy seems to abide only by United Nations sanctions and not those imposed by nations or groupings.
Although increasing trade with Pakistan must be a priority, increased economic cooperation with other neighbours should also receive more attention.
India’s trade with neighbours has stagnated at five per cent, against over 50 per cent in East Asia and around 20 per cent in Latin America.
Despite bilateral and sub-regional trading agreements between various South Asian Association for Regional Cooperation (Saarc) countries, non-tariff barriers greatly inhibit trade and investments in the region.
India, as the largest economy of the region, has a special responsibility in increasing intra-regional economic integration. So, Sharma should aim to strengthen economic co-operation with neighbours, especially in services trade, with focus on healthcare, education and tourism; energy cooperation; and logistical connectivity.
