Breakthrough in bilateral trade ties with India
The Trade Development Authority of Pakistan (TDAP), in collaboration with the Federation of Indian Chambers of Commerce and Industry (FICCI) and Pakistan High Commission in India, organized the visit of a 70-member delegation to India, led by Pakistan’s Minister for Commerce, Makhdoom Amin Fahim.
Fahim was the first Pakistani commerce minister to visit India in 35 years. The largest-ever delegation to India represented 28 exportable sectors such as textiles, cement, agro food, plastics, petroleum, engineering, leather, etc.
To serve each sector well, the Trade Development Authority of Pakistan arranged more than 250 B2B meetings in Mumbai and New Delhi, along with holding two Business Conclaves as well. The prominent representatives to accompany the Federal Minister were Tariq Puri, Chief Executive TDAP and Zafar Mahmood, Secretary Commerce.
The commerce ministers of India and Pakistan have made significant breakthroughs in easing restrictions on trade between the two countries, with New Delhi expected to withdraw its objections to European Union trade concessions to Pakistan and Islamabad expected to reduce tariffs on imports of Indian goods. Officials on both sides were highly encouraged by the talks and the two countries are expected to finalize a number of agreements in the coming months.
TDAP and ITPO signed an agreement to facilitate the flow of bilateral trade and organize road shows and trade fairs as well as strategize action plans to encourage bilateral trade. The role of trade promotion bodies of both countries is significant in breaking the ice between them.
India has signaled a supportive and constructive role in support of Pakistan for the EU’S concessions in order to help the latter recover from devastation caused by floods. The European Union had originally sought to reduce tariffs on 75 goods for a period of three years, including 67 on which it would be reduced to zero. Pakistan currently exports approximately $1.2 billion worth of such goods, a figure that the EU expects to increase by about $136 million, or 11.1 percent, as a result of the concessions.
Recently Pakistan has also granted MFN (Most Favoured Nation) status to India, which is expected to provide a great impetus to trade ties between both countries. Pakistan already enjoys MFN status with India.
The talks led to a constructive engagement towards a liberalized business visa regime. Pakistani entrepreneurs will now be able to get one-year multiple visit visas with no restrictions on their travel destinations. India has also agreed to begin exporting BT cotton seeds to Pakistan. BT stands for Bacillus thuringiensis, a toxin-producing bacterium found naturally in soils, which is expected to increase Pakistan’s agricultural productivity.
As the talks were aimed at multiple sectors, the lack of banking ties between the two countries was also addressed as a significant hindrance to trade, since all trade transactions are conducted and financed through banks. Currently, companies from both countries use Western banks, which charge higher fees. If Indian and Pakistani banks begin to do business directly, it will greatly reduce transaction costs for the average trader in both countries. In this context, Tariq Puri shared details about the plan for the setting up of formal banking links between the two countries. This is expected to come about after a delegation from the Reserve Bank of India visits Pakistan.
The Indian commerce minister said India is also contemplating removing its blanket ban on capital inflows from Pakistan, while Pakistan has no such ban on Indian investment.
Currently, Pakistan’s exports to India stand at US $300 million, while the imports from India stand at US $1.5 billion. In order to revive the maximum trade potential of the two neighbouring countries, the Tdap-organized delegation brought numerous non-tariff barriers to the attention of Indian government and business, as the NTBS are impeding trade growth between the two countries. The visit proved to be an attempt by Pakistan to create an atmosphere of goodwill and trust, which is expected to strengthen the Composite Dialogue taking place between the two countries
Makhdoom Amin Fahim, Minister of Commerce, welcomed by the Federation of
Indian Chambers of Commerce and Industry (FICCI) in India.