ISLAMABAD/NEW DELHI, 28 September 2006 — Pakistan decided yesterday to allow imports of machinery, surgical items, chemicals and pharmaceuticals from India to expand economic relations between the South Asian rivals.
Trade between the neighbors has been held back by their history of enmity following their independence from Britain in 1947, but a peace process begun in 2004 has seen a thaw in relations that has coincided with India’s emergence as an economic powerhouse.
While India granted a Most-Favored Nation (MFN) status to Pakistan, Islamabad has yet to reciprocate and instead regulates trade through a list of items deemed tradable with India. The Economic Coordination Committee, Pakistan’s top decision-making body on economic issues, yesterday allowed import of more than 302 “tariff lines” from India.
Pakistan earlier had put 1,527 tariff lines on the list, covering a total of just under 800 products.
“The decision will allow import of different items of machinery, surgical goods and chemicals from India,” Ashfaque Hasan Khan, an adviser to the prime minister, told reporters after the meeting.
The new additions to the list of permissible items will also include raw materials and metals, diesel locomotives, and textile machinery.
“The taxes and duties applicable on these items will be the same as those applicable on imports from other countries,” said Khan.
While India’s surging economy has stolen the spotlight, Pakistan’s economy has also been one of the fastest growing economies in the world despite the lack of integration between the two. The constraints on trade had irked some Pakistani industrialists, who have imported Indian-made goods, like textile machinery, from Dubai in order to beat the ban, businessmen say.
Trade between the two neighbors has grown since they launched a peace process, but remains well below $1 billion a year, and under $2 billion including a black market trade mostly routed through Dubai.
Meanwhile, in the Indian Punjab city of Ludhiana, Prime Minister Manmohan Singh brushing off criticism from the opposition Bharatiya Janata Party said yesterday improvement in Indo-Pak ties would give a boost to trade that would benefit Punjab the most.
Describing the measures being taken by his government to facilitate trade, Manmohan said: “The infrastructure at Wagah is being upgraded to make it a major trade point between India and Pakistan. I must say that over the last two years, we have taken a number of steps to improve relations with Pakistan and the people of Punjab have benefited through bus services and trade opportunities. I am hopeful that as the situation normalizes, Punjab will once again become a major trading center.”
“While Punjab can lead the second green revolution, its future depends on more industries and knowledge centers,” Manmohan said. He also praised the chief minister saying he worked “tirelessly” for the state’s development.
Manmohan inaugurated the Dedicated Freight Corridor (Eastern) Project of the railways linking Ludhiana with Calcutta in a move to facilitate faster movement of trains carrying goods and raw materials from major ports to the industrial hubs.
The prime minister said the Rs.220 billion dedicated corridor would help in faster transportation of goods and raw material to and from ports.
