In Pak, Biz­men Hope Trade Bar­ri­ers Fall

Some in­dus­tri­al­ists say trade could even dou­ble in 2-3 years, and also curb smug­gling

The Economic Times - - Companies - RACHITA PRASAD

Prime Min­is­ter Naren­dra Modi’s cor­dial meet­ing with his Pak­istani coun­ter­part Nawaz Sharif on his first day in of­fice has ig­nited hope among in­dus­tri­al­ists across the bor­der that trade be­tween the two neigh­bours could dou­ble from $3 bil­lion a year over the next two-three years.

The meet­ing on Tues­day may well sig­nal the be­gin­ning of im­prove­ment in strained re­la­tions be­tween the two coun­tries and trade could be a ben­e­fi­ciary and an agent for change, a cross-sec­tion of Pak­istani busi­ness lead­ers told ET, adding that this could also help curb the men­ace of smug­gling.

“Trade re­la­tions be­tween In­dia and Pak­istan will be the back­bone of im­prov­ing trade in the SAARC re­gion. When the two coun­tries trade more with each other, there will be a strong will and com­pul­sion to im­prove re­la­tions,” said Zakaria Us- man, pres­i­dent of the Fed­er­a­tion of Pak­istan Cham­bers of Com­merce and In­dus­try. Bi­lat­eral trade be­tween In­dia and Pak­istan is a frac­tion of the es­ti­mated po­ten­tial of $40 bil­lion a year, al­though the two coun­tries also trade in­di­rectly, via mainly Dubai, to the tune of $6-7 bil­lion an­nu­ally. Es­ti­mates put smug­gling be­tween the two coun­tries at as high as $3 bil­lion a year. “Our stars have aligned as both coun­tries have strong demo­cratic lead­ers who are prag­matic and busi­ness-ori­ented. There are nat­u­ral syn­er­gies be­tween the two coun­tries and re­mov­ing bar­ri­ers and open­ing trade chan­nel could help trade grow to $10 bil­lion in a few years,” said Amin Hash­wani, ex­ec­u­tive di­rec­tor of the Hash­wani Group. Many Pak­istani busi­ness lead­ers had backed Modi in the run-up to the re­cent gen­eral elec­tions. Dur­ing a visit to Pak­istan in Novem­ber, this cor­re­spon­dent had met sev­eral in­dus­tri­al­ists and traders who said that they hoped Modi would win with a strong ma­jor­ity so that he and Sharif could work to­wards peace. In their meet­ing on Tues­day, Modi and Sharif dis­cussed de­vel­op­ment and eco­nomic re­vival as a com­mon agenda, perk­ing up sen­ti­ment among

Bi­lat­eral trade be­tween In­dia and Pak­istan is a frac­tion of the es­ti­mated po­ten­tial of $40 b a year

the busi­ness com­mu­nity in both coun­tries. “Modi has a rep­u­ta­tion of be­ing anti-Mus­lim. But he also has a rep­u­ta­tion of be­ing pro-busi­ness. If his govern­ment takes some steps to ad­dress the con­cerns and fa­cil­i­tate trade, it will go a long way,” said Muham­mad Yasin Sid­dik, chair­man of All Pak­istan Tex­tile Mills As­so­ci­a­tion. He added,“Cus­tom clear­ances take time and we face sev­eral non-tar­iff chal­lenges. This should be ad­dressed im­me­di­ately.” In­dian firms, too, see ben­e­fits in im­proved trade ties. “Pak­istan has fuel, but does not have power plants. We have power plants sit­ting idle. If we open rail and roads for trade, and im­port fuel from there, we could run our plant and even ex­port to them part of our gen­er­a­tion,” said Shailen­dra Roy, di­rec­tor and head of power busi­ness of In­dian en­gi­neer­ing gi­ant L&T. In­dia-Pak­istan trade thrived for nearly two decades af­ter In­de­pen­dence, un­til the war of 1965. Trade hap­pens pri­mar­ily across Pak­istan’s west and In­dia’s east Pun­jab through the Wa­gah bor­der, but traders hope the two coun­tries could open other cor­ri­dors like the Mun­abao-Khokhra­par con­nect­ing Sindh and Ra­jasthan. While In­dia may ben­e­fit from cheaper goods from Pak­istan, the lat­ter hopes to gain tech­ni­cal know-how and value-added en­gi­neer­ing and IT ser­vices.

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