Trade with India to reach $2bn this fiscal: 302 items on positive list
By Mubarak Zeb Khan
ISLAMABAD, Oct 18: Pakistan has diverted its global trade of $1.332 billion to India following the inclusion of 302 new importable items, mostly raw materials, industrial machinery and its parts, in the positive list to increase the volume of bilateral trade, officials told Dawn on Tuesday.
With the full utilisation of these importable products from India, which were currently imported from various countries, the volume of bilateral trade between Pakistan and Indian would reach around $2 billion during the fiscal year 2006-07. Indian would then become Pakistan’s sixth largest trading partner after the US, the EU, China, Saudi Arabia and the UAE.
Pakistan has recently added 302 new items to the positive list for trading with India. The total number of trading items with India now comes to around 1,075. The enhancement of the positive list will also increase the scope of Safta between Pakistan and India, as more items will be considered for duty reduction under the agreement.
Officials said that out of 302 new items, import of 111 raw materials, 171 machinery and parts and 19 other items were allowed from India following demands from various stakeholders, particularly from some industries. The other items include surgical related equipments, homeopathic medicines and diesel locomotives.
According to the officials, only 20 items out of total 302 were placed under Pakistan’s sensitive list of the Safta agreement. This means that 282 items will be eligible for duty reduction under Safta.
Pakistan has already had a huge trade deficit with India and the liberalisation of trade will further swell trade deficit, as Pakistan’s exports are not increasing at that pace as it should be because of non-tariff barriers in the Indian market.
The officials said that though Pakistan trade gap would widen with India, the import of these items from India at cheaper cost than what was being paid now would save huge amount of foreign exchange for the national kitty.
The officials, however, did not mention the exact amount of saving Pakistan would achieve due to diversion of trade of these items from global partners to
India. “We assumed that it would help a lot in reducing the cost of doing business as reduced freight and other charges would make the products less expensive for our industries,” the officials added.
The State Bank of Pakistan in its report identified greater potential of Pakistan-India trade in the range of $1 billion to $5.2 billion in a year as according to an analysis of bilateral trade composition in the year 2004. The reports identified 1,181 items worth $3.9 billion common between Pakistan’s exports and Indian imports. Similarly, against 2,646 common items of Pakistan’s imports worth $7 billion in the year 2004, India had exports worth over $15 billion.
The study found that in case of over 50 per cent of these items, the unit values for Pakistan’s imports are more than the unit value of Indian exports, hinting at the possibility of the import potential from India to Pakistan of many of these items at far cheaper cost than what is being paid now. The study assesses Pakistan’s average national saving in foreign exchange between $400 million and $900 million provided the Pakistan government expands its positive list of importable items from India.
Analysts said that trade with India, still under one billion dollars -- was not large to have an impact on the overall export performance, but it had the potential to become large if both the countries approached it in the right way and did not make quick changes in policies and procedures.
They pointed out that complementarities existed between the two countries in the sectors of agricultural products, tires, minerals, iron and steel, chemicals and pharmaceuticals, automobiles and their spare parts, leather, new and renewable energy technology and cooperation between small and medium enterprises. Pakistan is a competitive supplier of cotton goods, particularly men’s apparel, home textiles and fabric.
