PESHAWAR, April 22: India on Saturday said that if Islamabad provided New Delhi with the transit facility for trade with Afghanistan then it would also benefit Pakistan as Peshawar would become a hub of economic activity.

This was stated by Indian High Commissioner to Pakistan Shiv Shankar Menon at a gathering of members of the Sarhad Chamber of Commerce and Industry.

He pointed out that due to logistics limitation at the Attari-Wagah border and the decision to allow Afghan goods to India through Pakistan — but not Indian goods to Afghanistan – the GT Road could not fulfil its function as the historical trade route.

He said the three governments should remove hurdles in the Pakistan-India-Afghan trade to boost reconstruction process in the war-torn country and trilateral economic ties which had become more important after Afghanistan joined the South Asian Association for Regional Cooperation.

Rejecting impression that India was spending huge sums on defence, Mr Menon said his country only spent 2.5 per cent of its GDP on defence compared to 10 per cent on health and 6 per cent on education.

He, however, stressed that there had been a big change in Pakistan-India ties since 2004, particularly bilateral trade which had exceeded $800 million against $334 million two years ago.

“We stand today at a moment of opportunity in our relationship. The composite dialogue process that we are now engaged in, premised on an atmosphere free of violence and terrorism, attempts to settle outstanding issues and pave way for peace,” he said and added both the governments had re-established trade and travel links and were trying to build the infrastructure for trade.

He said both the governments would soon sign a shipping agreement that would permit cargo movement between Mumbai and Karachi by Indian, Pakistani and third-county vessels.

“Rail cargo links have been re-established through Attari-Wagah and India is ready to do so through Khokhrapar-Munabao as well,” the high commissioner said.

He stressed that India also wished to liberalise the visa process, particularly for businessmen. He expressed the hope that civil aviation links, allowing private flights between the two countries, would be increased.

“If we are to develop our economies we have to work with each other because South Asia is one of the least economically integrated regions in the world,” Mr Menon said, adding that intra-regional trade between South Asian countries accounted for a mere 4.4 per cent or so of their total foreign trade.

In reply to a question, he said India had not banned transmissions from Pakistani channels.

Earlier, SCCI president Ghanzanfar Bilour in his speech said that Safta agreement boost economies of South Asian countries.