KARACHI: Trade with India is not a threat, but an opportunity, which should be effectively taped through support and cooperation of respective governments.

It is a wrong perception that the influx of Indian goods would have a depressing effect on the national economy. Their contention is that Pakistan's industry has potential and inherent capacity to compete, as compared to Indian industry, which is over-protected and subsidized.

These were the findings of businessmen, who visited India under a delegation led by Siraj Kassam Teli, President, Karachi Chamber of Commerce and Industry (KCCI) to New Delhi and Mumbai (India) from February 21 to March 1, 2004.

President KCCI on Saturday sent the findings and recommendations to the government.

In an era of globalization, which contemplates liberalization of trade also, the maxim of 'survival of fittest' would be the touchstone of trade promotion. As such the days of captive market will no more return. Our government must, therefore, provide an enabling atmosphere to our industries for adhering to the principle of cost-effectiveness and quality and standard.

Although the recorded trade between India and Pakistan is not more than $250 million, but through third country and illegal channels, it is more than $2 billion. The actual potential of trade between the two countries is estimated within the vicinity of $10 to 15 billion, which should be fully explored and expanded by adopting common approaches and joint strategies.

According to KCCI chief, the Indian industry enjoys supremacy in value-added goods, including engineering, auto-industry, cement, pharmaceutical, chemicals, software and other high-tech industries, whereas Pakistan edge lies in certain categories of textile products, leather goods, fruits, vegetables etc. The free trade with India would also eliminate or at least contain the element of smuggling or trade through third- countries. The governments of both the countries would, therefore, be beneficiary in terms of tax-revenue and the businessmen would be able to purchase low cost of goods at a comparatively low freight rates. The consumers at large will be benefited as a result of fierce competition.

Certain quarters also suggested that geographical proximity will reduce the total transport-cost by about $ 2 billion.

The Indian side, while showing strong will for the promotion of bilateral trade, identified a few road-blocks including the problem in travelling, emanating from police-reporting, non-grant of MFN status to India and the growing volume of trade through illegal channels and smuggling, causing stifling-effect on the genuine trade and industry as well as loss of revenue to the governments.

In view of what has been stated above, the KCCI has recommended for the consideration of the government, to facilitate and promote bilateral trade:-

Travelling Facilities:- It was the considered opinion of both the sides that in the context of ongoing confidence-building measures, it would be most timely if the visa issuing formalities and restrictions be eased and Immigration rules are relaxed, particularly for the businessmen of both the countries. Business visas be issued on the recommendations of Trade Bodies of the respective countries. The system of police- reporting as well as confining the visa to particular cities and the same port of entry and exit, be abolished;

Import of Machinery etc: Goods not produced in Pakistan or whose production is not sufficient to meet the demand, be allowed to be imported from India: a) There is a more scope of doing trade in textile products. Pakistan is well placed in certain categories of textiles. List of such goods be prepared and exchanged; b) Textile machinery not produced in the country, be allowed to be imported from India; c) Similarly, construction machinery and material, which is much cheaper in India, be allowed to be imported; d) The resumption of further trade with India, would ultimately lead to the emergence of dealers/agencies, setting up of warehouses and ultimately joint-ventures. Pakistan would be beneficiary of developing cooperation and collaboration in the field of textile, automobile, software, chemicals, petrol-chemicals and tourism, energy, water and a host of other items.

Regional Trade: The survival of developing countries lies in regional trade on a large scale to face the challenges, emerging from new world order as well as invisible barriers like anti- dumping laws, social, labour standard, environment, etc., being imposed by developed countries. Strong bilateral economic relations between India and Pakistan would help strengthen the Saarc. Meanwhile, the possibilities of giving effect to Safta earlier than on January 2006, be examined.

Shipping: It was disclosed in India that the shipping lines would soon start operating between Mumbai and Karachi. In the meantime, it will be in the fitness of things, if our government withdraws the restriction on using Indian flag vessel.

Meanwhile, the ferry service be started between the two major commercial and industrial cities i.e. Karachi and Mumbai, to facilitate the travelling and trade.

MFN Status: Pakistan and India are both signatories to WTO, which envisages free trade on non-discriminatory basis. Pakistan has already allowed concessionary import of 463 items to India under Safta. The government may, therefore, like to grant MFN status to India. The business community of Pakistan generally believe that it will not cause any damage to our economy.

Illegal Trade: Both the sides were unanimous on doing away with the menace of smuggling and trade through third country, including Dubai, Singapore, etc. We, therefore, recommend to the government to take effective and deterrent measures to curb this menace.

Role of Embassies: The role of Pakistan's embassies/High Commissions abroad must be strengthened so that they could be able to assist the country's trade delegations to make their visit a success in a foreign country.

Cost-Commission: Pakistan's industry has been suffering due to the growing cost of production, because of a variety of factors, including exorbitant power tariff, high rate of taxes, problem of refund, defective labour laws, etc. It is, therefore, recommended that the government immediately set up a cost-commission, which should also consist of representatives of trade and industry. The Commission must particularly examine the cost-structure of selected export-based industries and come out with cost- mitigating measures at the earliest, so that these may be incorporated in the forthcoming Federal Budget as well as trade policy.

Appeal to Industry: The delegation also appeals to industrialists to expand the size of their production, undergo the process of modernization on the lines of Textile Sector, focus on quality and cost-effectiveness, so that they could effectively face the competition both at home and abroad."- A.S.K