India, Pakistan pledge to normalise trade ties

November 14, 2011


Pakistan's Commerce Secretary Zafar Mahmood (R) speaks as his Indian Counterpart Rahul Khullar looks on in New Delhi on November 14, 2011.—AFP

NEW DELHI: Top officials of India and Pakistan began talks Monday to flesh out a plan to open up trade between the countries, after Islamabad said it would grant most-favoured nation status to India.

Pakistan's Commerce Secretary Zafar Mahmood and his Indian counterpart Rahul Khullar are holding two days of discussions in New Delhi aimed at doubling annual trade in the next three years to $6 billion.

The visit followed the Pakistani cabinet's decision on November 2 to grant “most favoured nation” (MFN) status to India, reciprocating a move made by New Delhi in 1996.

“The cabinet not only gave its full approval but also mandated the commerce ministry to achieve complete normalisation of trade” with India, Mahmood told the meeting in New Delhi.

The cabinet's decision was seen as a breakthrough in efforts to thaw relations between the South Asian neighbours who have fought three wars since independence from Britain in 1947.

Mahmood said Pakistan “hopes to cover a lot of distance” in this week's talks.

“We will have interactions in the spirit of mutual cooperation and confidence so please have trust and faith in the process (as) times have changed and the world is coming closer,” he said.

The meeting was part of a start-stop peace dialogue flagged off in 2004 by India and Pakistan but put on hold by New Delhi after attacks by gunmen left 166 people dead in Mumbai in 2008.

“Through this meeting we want to create an atmosphere through which the composite dialogue can go forward,” Mahmood said.

Khullar said India welcomed the MFN status that is intended to remove discriminatory higher pricing and duty tariffs that stand as barriers to exports between the South Asian neighbours.

“Our business communities, our politicians and our citizens are looking to both our delegations to deliver a substantial breakthrough — not only for full normalisation of our trade relationship, but to go beyond and lay a strong foundation for preferential trading arrangements,” Khullar said.

Analysts have said the decision to ease trade barriers could open enormous opportunities in sectors such as agriculture, textiles and pharmaceuticals for the two countries.

Khullar also said India and Pakistan have reached a “broad agreement” to liberalise business visas which would help spur cross-border trade.

“We are hopeful that an agreement shall be finalised during the next round of home secretary level talks, slated for December,” he told the delegates.

The prime ministers of the two countries met last week on the sidelines of a South Asian summit in the Maldives, saying they expected to open a “new chapter” in bilateral talks.

India and Pakistan have fought three wars, two of them triggered by their territorial dispute over Kashmir, which remains a major hurdle in any future comprehensive peace deal.

The peace dialogue between the two countries was resumed in February this year. India's Commerce Minister Anand Sharma has said he would lead a trade delegation to Islamabad next February at the invitation of his Pakistani counterpart, Makhdoom Amin Fahim.