THIS is a brief analysis intended to stimulate discussions of the export opportunities for Pakistan. Whilst such an analysis is a complex matter and involves multi-dimensional factors, the fact remains that by and large, a country will import from Pakistan goods and services that they are already importing from worldwide sources subject to Pakistan’s capacity to export.

Comments also have been given here for items which are significance for Pakistan’s export based on current imports to India but which need to be examined by private sectors of Pakistan and India and, their respective trade bodies, including trade promotion organizations such as Export Promotion Bureau, Engineering Development Board, Horticulture Board and Board of Investment.

This analysis reflects what India imports from the world. Further analysis is also provided in the same worksheet at six digit level for 1562 products which accounts for almost 50 per cent of the total import of India.

The statistics compares India’s imports of each item from the world, with exports of the same item by Pakistan to the world (reflecting Pakistan’s capacity to export that item) and the export of the same item to India. This results in a current ‘statistical’ export potential based on the formula viz the value of India’s world import, subject to a maximum of Pakistan’s export of the same to the world, less any export of the same already being made to India.

This potential therefore reflects the total import demand in India subject to the exporting capacity of Pakistan less Pakistan’s existing share of the Indian market. Since comparison is all for the same product at six digit level, the comparison is valid.

It may be borne in mind that items where India’s imports are high and Pakistan has reasonable production capability and comparative edge, (even if not presently exporting), such items are candidates for export-oriented joint venture (JVs)/investments in Pakistan. Such JVs could be for buy backs based on equity or technology or marketing etc. Some such areas have been identified here.

Just four HS Codes at six digit level account for 30 per cent or $23.2 billion of India’s imports of $77.2 billion. All other items are less than one per cent each of India’s total imports. Some of the major ones where Pakistan has or can create an export opportunity, either as at present or with JV/collaboration etc. are illustrated below.

Reviewing India’s imports, it emerges that total imports of India were $77.2 billion in 2003. Just one item i.e. ‘petroleum oils and oils obtained from bituminous materials’, accounts for import of $18.6 billion or 24 per cent of total imports.

Pakistan’s capacity to export such items is small, i.e. $27 million only and with zero existing exports to India; the maximum statistical potential is therefore just $27 million.

The other three are as follows: ‘Transmission apparatus for radio telephone incorporating reception which accounts for $1.8 billion or 2.4 per cent of total Indian imports. Pakistan’s exporting capacity here again is negligible at just $250,000.

The third largest import from India is ‘petroleum oils and oils obtained from bituminous materials, other than crude etc. India’s import is $1.7 billion of these which is 2.2 per cent of total Indian imports.

Fortunately, Pakistan has the capacity to export these items reflected in exports of such items, of $256 million in 2003 and offers the single largest present export opportunity.

Items exported by Pakistan included in the $263 million are naptha, diesel, kerosene, JP 1, JP IV, transformer oil, furnace oil, petroleum bitumen, petroleum jelly, petrol, lubricants etc. With low freight costs to India, as for Afghanistan, there is a strong possibility.

The 4th largest item of Indian import is coal, whether or not pulverized but not agglomerated’. India’s imports in 2003 were $1.1 billion i.e. 1.4 per cent of total imports and growing at seven per cent per annum in last five years.

Pakistan has plenty of coal but whether the specifications are as required by India, needs to be examined. Current exports of coal from Pakistan are just $1.2 million. This may well be a significant opportunity, especially due to low freight/overland transport opportunities.

‘Parts and accessories of automatic data processing machines were imported of a value of $807 million i.e. one per cent of India’s imports, growing at 13 per cent per annum in last five years.

Pakistan with low wages but with appropriate collaboration could develop the capacity and capability to cater to some of these needs.

Aircraft parts are imported by India of a total value of $387 million and growing at 72 per cent per annum in last five years. Pakistan’s exports are dollar one million $1 million but the capacity —both in private and public sector— is fast growing making this sector a strong candidate for joint ventures.

News print in rolls or sheets is imported by India to the tune of US$ 346 million. We need to develop additional capacity.

Pakistan’s textiles and garments industry in last six years have grown by 74 per cent. Significant investments have been made in improving technology, quality range, efficiencies etc. Imports by India of denim fabric of cotton >/=85 per cent, more than 200g/m2’ is $20 million. Pakistan has excellent capacity and capability for denim.

The sector offers opportunities of exports to India and joint ventures for increasing scale of production for export to even third countries. India imports ‘woven fabrics of cotton >/= 85 per cent, not more than 200g/m2 bleached’.

Pakistan has excellent quality and capacity reflected in its exports of $45 million of this HS Code suggesting a short term export opportunity of almost $18 million. Cotton not carded or combed is imported by India to the tune of $334 million. Pakistan exports $47 million of the same to the world but nothing to India. India imports, logs, non-coniferous of $322 million, almost 0.4 per cent of India’s imports. Pakistan’s exports are almost nil at $57000 only.

India imports $309 million of motor vehicle, while Pakistan’s exports of this are only $12 million, this is a fast developing sector and an excellent opportunity for exports, JV/buy backs etc. The HS Codes listed so far above, account for 34 per cent of India’s total imports of US$ 77.2 billion.

Of the rest of India’s imports, some of the significant export opportunities for Pakistan where existing capacity and capability exists or can be created are as follows: Appliances used in medical or veterinary sciences are imported by India to the tune of $140 million.

Pakistan’s worldwide exports are $126 million but current exports to India are just $51,000. This suggests a significant opportunity of almost $126 million. Medicaments imported by India are of $84 million. Pakistan’s exports to the world are $31 million of the same, with exports to India being just $32,000. The opportunity in the short term exists for about $30 million with significant capacity to grow and of JVs.

India’s import of articles of jewellery and parts thereof, of precious metals’ of a value of $83 million i.e. 0.11 per cent of India total import. Pakistan’s export growth in this sector in last six years of 118 per cent, especially of the precious and semi precious stones reflects growing strength in this sector. Pakistan with its cultural similarity, excellence of design, low cost of production and existing export level of $24 million has a significant opportunity for exports, joint ventures, marketing etc.

Current export potential based on current capacity is $24 million but this can be significantly increased. Similarly, India imports ‘precious semi-precious stones, other than diamonds un-worked/simply sawn/rough shaped of the tune of $77 million Pakistan has rubies, emeralds, cats eye, lapis lazuli etc. but current formal exports to India are zero, even in un cut form. This offers a huge opportunity provided Pakistan’s supply chain including mining, cutting, polishing etc. can be improved.

Even as at present, in the uncut and unpolished form, the potential is significant for exports to India, almost $15 to $20 million against their imports of $77 million in 2003.

Pakistan’s printing industry is good and growing. India imports $77 million of printed matters. Pakistan has a good chance of taking a reasonable share of this.

Engineering goods consist of electrical, non-electrical and transport and are emerging fast. Export growth in last six years overall has been 243 per cent, within this sector. India imports parts of vacuum pumps, compressors, fans, blown, hoods to the extent of $76 million.

A 10 per cent share is not impossible plus the opportunity for joint ventures. India imports ball bearings of $70 million. Pakistan has an expertise to grow this segment and this sector also offers opportunities for joint ventures and buy backs.

India imports $66 million of parts of air conditioning machines. Pakistan’s industry and exports are fast increasing of such parts. This sector provides opportunities for joint ventures and buys back.

Pakistan’s leather industry is almost world class and exports in last six years have grown by 75 per cent. India imports $53 million of bovine and equine leather. Pakistan’s exports are $99 million. A potential of over $50 million therefore exists for exports to India.

India and Pakistan have similar economies. There are larger number of products that, for example Bangladesh, Sri Lanka import from the world that Pakistan has the capability to export, compared to India.

For example, at two digit level, India’s top imports are of items where Pakistan is not currently a very large player i.e. mineral fuels, oils, distillation products of India’s imports, pearls, precious stones, metals, coins etc.(18 per cent of India’s imports), nuclear reactors boilers and machinery etc of India’s imports), electrical and electronic equipments of India’s imports.

These four sectors alone account for 68 per cent of India’s total import i.e. $53 billion out of the total imports of $77.2 billion in 2003. On the other hand, where Pakistan’s major strengths lie, India is not a major importer. Over 60 per cent of Pakistan’s exports are textile and garments of which India’s current imports do not reflect large dollar opportunities. Similarly, our leather, rice etc. are also exported by India and relatively little import is made of the same.

Regional trade however is an interesting phenomenon. Private sector entrepreneurship knows no boundaries. When trade becomes free and easy unforeseen opportunities hitherto untapped, emerge. An example is Afghanistan where exports have increased from $38 million in 1998-99 to $748 million in 2004-2005. Whilst the statistical maximum current export potential of Pakistan to India emerges at about $1.3 billion for Pakistan, a number of new opportunities are bound to emerge, new joint ventures and investment opportunities will strengthen trade and economic ties between the two fast growing economies of South Asia.

(The writer is the Chairman, EPB)