PESHAWAR: After having lost a considerable proportion of local markets to Indian and Chinese smuggled products, NWFP's trade and industrial circles foresee a mixed future of bright prospects and tough challenges at the hands of the South Asian Free Trade Area (Safta) agreement. The framework for this agreement was signed recently by member countries of the South Asian Association for Regional Cooperation (Saarc).
Business circles believe that NWFP will also benefit by the overall positive impact of Safta and its related economic activities in Sindh and Punjab, though a negative impact on some sub-sectors of the manufacturing sector cannot be ruled out.
Manufacturers see a potential threat to the NWFP's pharmaceutical sector as a result of the import of low-priced Indian medicines.
"We will certainly try to get medicine on the negative list which would be prepared by the Safta member countries," said Zahid Arif, president of the Sarhad Pharmaceutical Manufacturers Association (SPMA).
He said that free trade of medicines from India would undermine the local manufacturing sector which is already under immense pressure from the influx of smuggled Indian medicines.
Local pharmaceutical manufactures, according to market forces, are already feeling the heat due to tough competition at the hands of smuggled Indian medicines which have flooded the local medicine markets.
The low-priced Indian medicines smuggled via Afghanistan and Iran have captured a considerable portion of medicine markets in NWFP and its adjoining Federally Administered Tribal Areas (Fata), attracting low income groups and doctors.
Former president of the Sarhad Chamber of Commerce and Industry (SCCI) Jamshed Savul said that the local pharmaceutical manufacturing sector which was growing at a respectable rate would suffer considerably if restrictive measures were not taken to protect it from the negative effects that Safta might entail.
"Except for the pharmaceutical manufacturing sector, Safta is not likely to negatively impact the industrial sector of NWFP," said Mr Savul, adding that "Safta or no Safta, Chinese and Indian products, finding their way in NWFP through legal and illegal channels, have already swamped the local markets."
Failure to get medicines on the negative list, said the SPMA president, might lead to the closure of some pharmaceutical manufacturing units in the NWFP rendering large number of people jobless.
A former president of SPMA, Imtiaz Ahmed apprehended that the country's pharmaceutical manufacturing sector was facing a much greater threat at the hands of WTO regime than Safta.
"Though quality-wise our products are far better than Indian medicines, a much bigger challenge to the local manufacturers is posed at the hands of WTO which, if comes into effective from January 1, 2005 would leave little room for us to compete with the Western and European products," said Mr Imtiaz.
The Frontier province boasts about 40 operational pharmaceutical manufacturing units.
Mr Imtiaz said that there was no denying the fact that India was much ahead in manufacturing raw material and research, giving it an edge over Pakistan's pharmaceutical manufacturing sector.
"The government should announce incentives like lowering the electricity tariff charged to the pharmaceutical manufacturing sector if it really wants us to fight competition from Safta because of free flow of Indian medicines," said Mr Arif.
Manufacturers believed that Safta could open the doors of a very large market in India and other South Asian countries for the industrialists of Sindh and Punjab, in particular, and for NWFP, in general, if government exploits the situation effectively.
"Though the NWFP's industrial sector's interest is associated with the changing situation in Afghanistan and the Central Asian region, we could also partially benefit from the growing opportunities in the South Asian region because of Safta," said Mr Savul.
Like him, Ibrahim Shinwari, a prominent importer doing business in Lahore and Karachi, saw growing prospects of the Indian fabric and spices capturing large proportions of the NWFP markets in the wake of Safta.
"Indian fabric's import through legal channel, if allowed under Safta, would bring its prices further down in the NWFP's market giving further boost to its demand in the local markets," said Mr Shinwari, who also owns a business outlet in Peshawar's Karkhano market of imported goods.
He said that the smuggled Indian fabric, finding its way in Karkhano market and other Bara markets of the Frontier province, was high in demand for being low in price and good in quality.
"Gone are the days when customers would ask for Korean or Japanese fabric," said Mr Shinwari, adding that "Indian fabric has taken over much of the space in the local markets."
The frontier province could experience a substantial growth in the volume of business taking place in the gems, precious and semi-precious stones sector because of Safta.
The trade volume, said market forces, of this sector could grow to a greater extent and chances of foreign investment in NWFP would also grow in view of the large deposits of a variety of gems, precious and semi-precious stones located in different parts of the province.
"India has a large market and is a big exporter of value- added precious stones, while we have a large variety of gems available in NWFP, leaving a greater business prospects for both the countries once Safta becomes effective," said an importer.
Large quantity of raw gems excavated in different parts of the province, according to market forces, find their way every year in the Indian markets after passing through various direct and indirect channels, hence trade and business circles of NWFP stood greater prospects of getting benefit by improving their trade ties with India under Safta.