KARACHI, June 17: The governments of Pakistan and India will not only be able to make their countries economically viable but alleviate poverty and sustain economic co-existence ‘if economic knot between Pakistan and India is strengthened.’
Pakistan should utilize from the areas in which India has a comparative advantage in its potential sectors for investment. Pakistani importers and exporters may take advantage from the trade opportunity offered by India in its current export-import policy.
These remarks and suggestions are contained in a study on “Pakistan and India Trade Liberalization,” prepared by Jawed Aziz, additional director, Research and Economic Cell of Karachi Chamber of Commerce and Industry (KCCI) last week.
The study, however, says that to anticipate Pakistan’s relations with India is difficult and there are doubts regarding the success of the on-going talks between the two countries. Nevertheless, the business community of both the countries favour an economic marriage.
On the negative impact, the study says that free flow of goods between Pakistan and India can be slightly negative for Pakistan in the short run but over the long haul, it is definitely a win- win situation for both.
On the positive impact, the study says that Pakistan must accept the challenge as being the signatory to the WTO, it is bound to open trade with India after one and a half years. Pakistan is currently successfully competing with Indian products in world markets especially in the US and the EU. “If we have the potential to compete globally then why not in our region. We are producing much better quality then India.”
The study says that Pakistan could buy a host of high value-added items from India like automobiles, medicines, chemicals, steel and machinery, while it has potential to export raw material and low value-added items. From economic point of view, the most beneficial commercial ties between the two countries should also revolve around joint ventures in infrastructures development and manufacturing concerns.
Pakistan should lower the utility rates for local manufacturers of automobiles, the KCCI study says.
Both the governments can yield handsome foreign exchange through social, cultural relationship and tourism industry. Pakistan has to take advantage from the trade liberalization policies of India. To compete with, India must not be considered as a problem but as an opportunity.
Potential sectors for India to invest in Pakistan are oil and gas, power, telecom, aviation, railways, roads, banking and finance, petrochemicals, surgical instruments, leather, bicycles, electrical appliances, fertiliser, tea processing, livestock and dairy, fisheries and fruits and vegetables.
Potential sectors for investment in India are hardware and software, accessories and IT, automobiles, industrial robots, gem and jewellery, tea, transport, iron and steel, pharmaceuticals and metal products.
The KCCI study says that Pakistan and India should decrease their arms race and defence expenditure in order to create peace, prosperity and economic welfare of the people of both the nations. India this year increased its defence expenditure by 16.6pc to Rs635 billion and Pakistan has also increased it in 2003-2004 budget at Rs160 billion about 20 per cent of total budget.
