Economy
 
Trade movement at Attari-Wagha
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May 04, 2012
India and Pakistan putting aside their long time rivalry have inaugurated a new trading post on the heavily militarized Attari-Wagah border between the two countries.

The new trading post on the border is the latest sign of thawing economic ties.

The move follows an important symbolic visit by President Asif Ali Zardari to New Delhi, and coincides with a groundbreaking Pakistan trade fair in the Indian capital.

The launching of trade ties is music to the ears of merchants on either side of the India-Pakistan border.

Liberalising heavily restricted trade and investment flows is now the driver of peace efforts between the neighbours

“India has taken an in-principle decision, as a part of the process to deepen our economic engagement, to allow foreign direct investments from Pakistan in India,” said Trade Minister Anand Sharma at a news conference with his Pakistani counterpart.

Under current rules, Pakistani citizens cannot directly invest in India. Investment flows are unlikely to surge, but the move will go some way to addressing concerns by Pakistani businessmen that India places too many restrictions on them.

More than 600 Pakistani businesses were in New Delhi last week at a trade fair to promote their products to the Indian market.

In the face of some domestic opposition, the government of Pakistan President Asif Ali Zardari last November vowed to grant India most favoured nation status, which ends restrictions that require most products to move via a third country.

The move was hailed by India and the two countries are now focused on resolving economic issues before moving on to more intractable problems.

Sharma also said an agreement to relax restrictions on visas for Pakistani businessmen was almost ready.

Later on Friday, Sharma and the Pakistani trade minister, Makhdoom Amin Fahim, will open an expanded border trade terminal at Wagah, between Lahore and Amritsar.

Indian Commerce Minister Anand Sharma and his Pakistani counterpart Makhdoom Amin Fahim opened trade terminal at Attari-Wagah border on April 13.

Opening of integrated check post at Attari-Wagah border between Pakistan and India will cater to around 600 trucks a day and is expected to enhance trade to $8 billion annually from the current level of $2.6 billion.

Members of Associated Chamber of Commerce and Industry of India (ASSOCHAM) and Federation of Pakistan Chambers of Commerce and Industry (FPCCI) hailed the decision to allow foreign direct investment from Pakistan.

India's commerce minister at the opening of a trading post on the Pak-India border to soften the economic ties between the two countries said, "India has taken an in-principle decision, as a part of the process to deepen economic engagement, to allow foreign direct investments from Pakistan in India along with his Pakistani counterpart."

A member of the Karachi Chamber of Commerce and Industry (KCCI) said the Indian government's decision to sign opening Pak-India Multiple Entry Business Visa would benefit the business people of both the countries. "The step will soften the image of both the countries besides provide hassle-free entry into the respective countries," KCCI member GhulamRabbani said.

The cross-border trade decision will go a long way in saving time and costs incurred by third country trade route that includes almost 20,000 items, he added.

Opening up of the integrated check post at Attari-Wagah border and Pakistan's granting the most-favoured nation (MFN) status to India would increase the bilateral trade. Informal trade between India and Pakistan through third country like United Arab Emirates, Singapore and Hong Kong is estimated at $5 billion to $7 billion. Legislation of trade is expected to reduce costs and increase government revenue by collecting duties on imports.

Pakistan granted India MFN status in November, which ended restrictions required for most products to move via a third country.

Pakistan has committed to end the negative list of 1,209 items by the end of 2012 and move to a regime that is in line with World Trade Organisation (WTO) rules.

Integrated check posts with faster customs clearance facilities will normalise trade relations. The establishment of a joint business council and a joint study group can also support the process of trade normalisation.


Nearly 6,000 items can now be imported into Pakistan from India as against 2,000 items earlier. The two countries have the potential to make headway in sectors like petroleum products, pharmaceuticals, heavy industries, small and medium enterprises, chemicals, iron and steel, automobiles, electricity trade, IT and IT-enabled services, telecommunications, transportation and financial services.

Pakistan has expressed willingness to give India transit facilities for trade with Afghanistan and Iran, especially in energy and infrastructure projects.

Both sides expressed satisfaction at the joint and coordinated efforts made for making the new gates at the Attari Integrated Check Post functional for trade.

"The new arrangements shall streamline movement of trucks across the border and significantly enhance the flow of trade through land route," the joint statement said.

The Pakistani side said they have already built sufficient infrastructure at Wagah border and were clearing all the current cargo traffic.

On the issue of trade in petroleum products and electricity, the ministers expressed the desire that the officials concerned of both countries should fast track the ongoing process.

It was also noted that the respective central banks are examining issues relating to opening of branches of banks of both countries.

According to the joint statement, the two countries are likely to take a decision at forthcoming home secretary-level talks on liberalisation of grant of business visa.

"The ministers expressed their joint wish that business visa regime needs to be liberalised at the earliest," it said.

Pakistan economy had suffered a major set back due to the so called war on terror. The volume of government loans have reached Rs 70 trillions. The wheels of economic development has stopped. According to State Bank of Pakistan the investment is at its lowest level. The foreign reserves are declining. Factorie s and industries are suffering due to load shedding. Unemployment and poverty is rising forcing people to commit suicide. Under these circumstances Pakistan needs to enhance its trade and economic ties with its neighbouring countries the best interest of this country.

India offer to provide electricity to Pakistan is also encouraging. But besides these initiatives Pakistan and India need to settle core issues such as the Kashmir issue, water issues and Siachen. Both sides especially India needs to exhibit sincerity and seriousness. Until and unless Pakistan and India settle these issues the people of two countries cannot come closer and prosperity of both countries would remain a dream.

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