Pak-India trade stuck in controversies

KARACHI: The dream of full-fledged trade relations between Pakistan and India still seems distant as half-hearted efforts and hollow promises have not helped push the economic relations forward.

Though talks were held last month between foreign ministers of Pakistan and India to improve relations and take the peace process forward, they failed to bridge the trust deficit that had widened after the Mumbai attacks of November 2008. Without political reconciliation, it will be impossible to take trade ties to significant levels.

“We are standing at the same place where we were stuck six years ago despite a lot of efforts over all these years,” this was what businessmen told the Indian high commissioner to Pakistan during a visit to the Karachi Chamber of Commerce and Industry (KCCI) about a month ago.

Last week, Pakistan’s high commissioner to India came down hard on India for hampering trade between the two sides. He even went to the extent of saying that Pakistan would respond in kind if India did not dismantle its non-tariff barriers, which discourage exports from Pakistan.

Elaborating on the non-tariff barriers, businessmen say Indians create hurdles during Customs procedures, impose unclear duties and taxes and do not accept Pakistan’s quality certifications. “Even Indian importers do not know what are the duties and taxes on Pakistani products,” a businessman commented.

Political considerations

“Indian businessmen want trade but their government is reluctant mainly because of political considerations and public pressure,” former KCCI president Anjum Nisar said.

He said the Indian consulate now takes 40 days process visas of businessmen compared to 7-10 days earlier. This discourages exporters from striking deals with their Indian counterparts.

However, Nisar said the two countries have the potential to take their bilateral trade to $10 billion from the current around $2 billion. However, a lot of trade is conducted through third countries, particularly Dubai, which is not reflected in the official data.

Discussing the prospects, he said “we have potential for joint ventures in information technology and agriculture sectors. Besides we can make joint marketing of rice, particularly basmati and engineering goods.”

Quality tests

Businessmen say India does not accept quality tests of Pakistan and want the samples to be sent to their laboratories and in some cases their inspectors come to examine the quality of goods. “Delhi does not accept Pakistan’s quality certificates and wants its institutions to certify the goods. Who will send goods to India for quality tests which is a lengthy process?” asked President Federation of Pakistan Chambers of Commerce and Industry, Sultan Ahmed Chawla.

Domestic industries need machinery from India, an area where Pakistan has not made much progress. “Though Indian machinery is not of very high quality, it can still meet the needs of our industry,” commented an industrialist.

Cement exports

Cement is one of the major items where India faces a shortfall and Pakistan’s cement manufacturers have a capacity much more than domestic needs. In the last fiscal, which ended on June 30, the manufacturers exported around 11 million tons of cement to different countries, particularly to the Middle East.

“Quality assurance men come from India to assess our cement and only those factories can export which are certified by these inspectors,” said Brigadier Niazi, an official of the All Pakistan Cement Manufacturers’ Association.

He said logistics is also hampering shipments of cement as Indian railway authorities demand commission for transportation. “Despite making such illegal payments to the railway officials, they still do not facilitate the export of cement,” he claimed.

Niazi said installation of scanners on the Indian side of the border has also been pending for five years, adding absence of the screening facility also blocks export shipments.

The Indian high commissioner had promised businessmen a month ago that the scanners would be installed soon. Only time will tell what measures are taken by both sides to improve relations which will benefit not only the governments but people as well.

Published in The Express Tribune, August 2^nd, 2010.