India praises Pakistan's efforts to normalise trade ties

India's Minist­er of Extern­al Affair­s SM Krishn­a says Pakist­an is moving in the 'right direct­ion'.

India on Thursday welcomed Pakistan's decision to phase out major restrictions on Indian imports by the end of this year, a move to normalise trade ties between the nuclear-armed neighbours.

India's Foreign Minister SM Krishna thanked Pakistan for deciding to gradually scrap the "negative list" that prevents the export of hundreds of items from India.

"Pakistan is moving in the right direction in terms of bringing economic content into the political relationship," Krishna told reporters in New Delhi. "This would certainly help strengthen our bilateral ties."

Aiming at complete trade normalisation by the end of this year, the federal cabinet not only approved a negative list of 1,209 banned items, which will allow trade in all other goods with India, but also sanctioned the phasing out of the negative list in the next ten months.

At present, Pakistan maintains a positive list of 1,945 items that are allowed to be traded between the two countries. The switch from a positive to a negative list has long been a hurdle to freeing up trade between the two.

Information Minister Firdous Ashiq Awan had said on Wednesday that the move was taken on recommendations of coalition partners and cabinet members.

Awan had also said that the cabinet also decided in principle to phase out the negative list by December 31, 2012, which will complete the trade normalisation process.


This decision would mean that India can export 6,800 items against 1,950 at present.

India's Associated Chambers of Commerce and Industry, a trade body estimated that the move will increase cross-border trade to over $6 billion by 2014.

Direct trade between India and Pakistan currently constitutes less than one percent of their respective global trade. India exported goods worth $2.33 billion to Pakistan last year while its imports were $330 million.

In 1996, India granted Pakistan "most preferred nation" status which is intended to remove discriminatory higher pricing and duty tariffs.

Pakistan agreed in principle to grant a similar status to India last year, paving the way for a radical change.

Deepening economic engagement between the two countries is seen as crucial to establishing lasting peace in the troubled South Asian region.

Relations between India and Pakistan, which have fought three wars since the subcontinent was partitioned in 1947, have been plagued by border and resource disputes and accusations of Pakistani militant activity against India.
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