Post-MFN, Indo-Pak bilateral trade can cross $12 bn by 2015: ASSOCHAM
GK NEWS NETWORK
Jammu, Feb 8: The bilateral trade between India and Pakistan can cross $12 billion mark by 2015 if Pakistan accords India the MFN status, ASSOCHAM said today.
“Export of commodities like sugar and sugar confectionary, cotton, coffee, spices, tea, petroleum products, iron, steel, pharmaceuticals, petrochemicals, fertilizers, paints and automobiles from Pakistan together with mutual trade promotion initiatives between the two neighbours can help boost the bilateral trade by almost five times from $2.7 billion realized in 2010-11,” it said.
The apex industrial body added that the MFN status by Pakistan to India would increase export of heavy industrial goods and imports of fruits and vegetables, mineral fuels, organic and inorganic chemicals and woolen products.
The ASSOCHAM has stressed upon the need to spruce up the land transport infrastructure and develop alternate transit routes between India and Pakistan to contain the high trade and transit costs.
“The two sides may focus on institutional agreements for developing transportation through sea routes, establishing state-of-the-art integrated check posts with quick customs clearance and commercial documentation procedure, and easing visa requirements,” said D.S. Rawat, national secretary general of ASSOCHAM while releasing the chamber study titled ‘The Potential of Indo-Pak Economic Engagement: A study with focus on post-MFN scenario.’
ASSOCHAM has also recommended establishing a Joint Business Council and a Joint Study Group to enable normalisation of trade between the two neighbours and dismantle trade and investment barriers.
The MFN status to India will also help legalise informal and illegal trade worth several millions of dollars through Indo-Pak border. “Besides, both the countries should work to reduce bilateral trade costs by reducing tariff and non-tariff barriers and better trade facilitation initiatives,” he said.
ASSOCHAM has recommended sea route as the most appropriate transit route for ensured and secured movement of goods and services between India and Pakistan.
“With India having surplus refining capacity, there exists a huge potential for export of petroleum products to Pakistan. The demand for petroleum products has been on an overdrive in Pakistan and might open new avenues for Indian refineries as India’s annual refining capacity is over 200 million metric ton as opposed to Pakistan’s 12 million metric ton.”
“India being world’s fourth largest producer of crude steel, its wide range of iron and steel products have the potential to be the leading items of export to Pakistan in presence of MFN tariff rates. Besides, India can export over one-fourth of its total steel exports to Pakistan in the post-MFN scenario,” it said.
The chamber said: Pharmaceuticals industry can also emerge as a leading sector if India is granted the MFN status and Indian pharma companies can garner a larger share in Pakistan’s growing pharmaceutical industry which largely consists of local and small producers.
Exports of chemicals accounted for 11 per cent of India’s total exports to Pakistan in 2010, Indian chemical industry may increase its share of exports to Pakistan to about 20 per cent if India gets the MFN status.
Besides, India can help meet demands of the automotive market in Pakistan by exporting components and spare parts at a lower price owing to low costs of labour coupled with a cost effective manufacturing process in wake of MFN status to India.
Ongoing industrialisation process in Pakistan will also boost the export of heavy industrial goods from India. Apart from this, power supply being a critical issue in Pakistan, the trade of electricity might open a new era of regional cooperation between the two neighbours as India can export about 500 mega watts of electricity to Pakistan.
The robust information and communication technology (IT) industry in India can provide competitive software and technical solutions to Pakistan and IT can be a potential area of trade in wake of MFN status being granted to India.
India’s telecommunication industry with its cutting-edge competitiveness has a huge potential to operate in Pakistan’s emerging telecom industry with increasing penetration of 3G services.
Pakistan’s shipping industry has huge potential to attract major players from India to provide services like operations and maintenance of container as well as bulk terminals. Opening up of financial services sector on a bilateral basis would help India and Pakistan in trade facilitation measure.
Considering that production in micro, small and medium enterprises (MSMEs) in India has been growing over 11 per cent during the course of past five years, there is huge growth potential in export of sugar and confectionary, handloom, cotton products, manmade filaments, tea and coffee, milk and milk products and poultry and others to Pakistan, the ASSOCHAM study said.
Lastupdate on : Fri, 8 Feb 2013 21:30:00 Makkah time
Lastupdate on : Fri, 8 Feb 2013 18:30:00 GMT
Lastupdate on : Sat, 9 Feb 2013 00:00:00 IST
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