India, Pakistan trade can reach $10 bn by 2015: CII

Bilateral trade between India and Pakistan can reach $10 billion by 2015, from $2.7 billion registered in 2010-11, if tariff and non-tariff barriers are removed, the Confederation of Indian Industry (CII) said Thursday.

In a report ahead of a business delegation visit to Pakistan led by Commerce and Industry Minister Anand Sharma, the CII said there was huge potential of increasing the bilateral trade between the two neighbouring countries.

“The trade potential between our two countries is very high and based on strong fundamental complementarities. One step of opening up of Wagah border for all tradeable items would double bilateral trade,” said Chandrajit Banerjee, director general of CII.

Noting that the large volume of informal trade indicates demand for each other’s products, CII made a number of recommendations to catalyse formal trade. In particular, it has suggested that Punjab provinces of both sides work together to leverage across-the-border advantages.

The CII said industrial clusters of the two Punjab provinces enjoy inherent complementarities in sectors such as textiles, small scale machinery, chemicals and engineering goods.

In a recommendation paper released before the delegation level visit, the industry body suggested full liberalisation of trade by placing items on a “negative list” rather than having only a “positive list”.

At present, only 1,946 items are in Pakistan’s positive list and only 192 of these may be traded through the Wagah border.

Truck movement of larger trailer trucks should be permitted. Double taxation should be removed and air connectivity raised, the CII said.

“Barriers to investment are particularly high due to restrictive visa regimes and difficult clearances. This results in the inability of industry on both sides to leverage each other’s financial, technological and managerial resources,” it said.

Trade balance is heavily in favour of India with its exports at $2.3 billion and imports from Pakistan at $332 million.

Major export items from India to Pakistan are sugar, cotton, man-made filaments and chemicals, while its top imports from Pakistan include edible fruit, mineral fuels, and organic chemicals.