PAKISTAN-INDIA HAVE TRADE POTENTIAL WORTH $11.7 BILLION

AMANULLAH BASHAR
Aug 25 - 31, 2008

Pakistan and India have a trade potential of 11.7 billion dollars, but the two neighboring countries need to overcome the atmosphere of mistrust prevailing between the two countries before taking proactive measures to exploit untapped areas of economic cooperation.

Actually, there is a huge information gap on both sides on items that can be imported by India from Pakistan, however, the trade policy released recently by the new government in Pakistan has tremendously increased the number of items for imports from India taking the trade volume to the tune of $3 billion which unprecedented and positions India as the second largest trade partner after China.

An Indian Council of Research on International Economic Relations (ICRIER) study, based on surveys of business people, has identified export potential of 2.2 billion dollars from Pakistan to India. On the other hand, India on the back of its huge economy can ship goods worth 9.5 billion per annum to Pakistan.

An examination of top 50 potential export items from Pakistan indicates that India is importing 45 of these items from the rest of the world, but not from Pakistan obviously due to strained political relations especially the core issue of Kashmir.

From Indian perspective, the examination of the top 50 items having export potential from India indicates that only 22 items are on the positive list.

Trade between India and Pakistan, though at low levels, has grown significantly in recent years. During 2000-01 to 2005-06, trade has increased by three and a half times from 251 million dollars to 869 million dollars per annum.

There is a large potential to boost bilateral trade, very few items having export potential from India are on the positive list adopted by Pakistan. At the same time, there are several items that India is importing from other countries, but not from Pakistan.

TRADE VOLUME

The volume of trade between India and Pakistan is likely to double following the trade policy announced by Pakistan recently which increases the number of items that Pakistan can import from India, said Tariq Sayeed, president, SAARC Chambers of Commerce and Industry.

The trade figures to jump from $2 billion to $4 billion due to the trade policy, said Tariq Sayeed who recently visited India to attend a conference on south Asian economic integration. It is interesting to note that certain quarters were raising accusing fingers that the trade policy was "pro-India". However, as usual these circles have made remarks in haste without having an in-depth study of the trade proposals. Hence the critics had not read the provisions properly. In fact, the policy specifically asks investors to set up manufacturing units in Pakistan".

For the first time, Pakistan has invited direct investment from India in the manufacture of CNG buses. It also allowed test import of ten-year-old CNG buses from Indian companies, who had committed to opening a manufacturing facility in Pakistan.

Besides, Pakistan had also increased the number of importable items from India by 136, including machinery for mining, cement bulkers and academic and reference books.

IPI

The Iran-Pakistan-India gas pipeline project is yet another significant area which if materialized would help mitigating the border tension usually prevails between India and Pakistan. Since the energy starved stakeholders or the partners both India and Pakistan would be reaping rich benefits of the pipeline project, this might prove a binding force for the partners to avoid clashes on petty matters to ensure existence of this cross border energy cooperation in the region.

The petroleum ministries of India and China are engaged in a serious dialogue about the possibility of Chinese participation in the Iran-Pakistan-India gas pipeline. However, the matter involves sensitive foreign policy issues on the back of US pressures against the project.

The US is opposing the idea of any country helping Iran to build up its economic infrastructure. The US in fact is against any move that may help Iran for economic help but the US forgets the fact that the energy shortages are killing the economies of the smaller or energy starved countries like Pakistan who have put their economy on stake just for supporting the US doctrine of war on terror.

The China National Petroleum Corporation (CNPC), another state-run Chinese company, is particularly interested in participating in the project. The CNPC is at present engaged in construction of the 998-km China-Kazakhstan oil pipeline, which is scheduled by year end.

The proposed gas pipeline is seen by some as a policy initiative to bring the countries in the region closer to each other, and possibly counter US influence in the region. The Indian Prime Minister Manmohan Singh had earlier told Parliament that US has no influence over the fate of Iran-Pakistan-India gas pipeline.

TEHRAN

Iran, Pakistan and India are striving to finalize the plan for import of natural gas from Iran. Iran's Oil Minister Seyed Kazem Vaziri Hamaneh evaluated the views of all sides of the so-called Peace Pipeline Agreement as positive, adding that US sanctions did not have any effect on the trend of the agreement.

Although India and Pakistan despite US pressures against the project are seriously pursuing talks and trying their best to achieve a mutual understanding on the cross border pipeline project and in this connection a round of expert talks on the details was recently held in Tehran.

The $8.5 billion IPI gas project envisages a 2,670 km pipeline, covering 1,115 km in Iran, 705 km in Pakistan and 850 km in India, and it would help to transport Iran's gas to meet India and Pakistan's increasing energy requirements.

CONCLUSION

The smaller economies have suffered a lot due to global economic shocks originated mainly from the US and other developed economies. The developed economies which always make tall claims for poverty alleviation from the world should come forward by keeping aside the political interests and ego and lend a helping hand to the smaller economies with a view to check poverty growing at alarming pace. The mounting inflationary pressures and global shocks have disrupted the pace of economic growth in this region. The main contributor in disruption of the economy in Pakistan is the ever rising energy cost. In this scenario, the cross border pipeline deserves support from bigger economies on humanitarian grounds as well.