This site provides detailed information on India Pakistan Trade Relations.

The site also

focuses on the current developments in trade relations between India and Pakistan.

India Pakistan Trade Relations are facilitated by the Federation of

Indian Chambers and Commerce (FICCI) and the Federation of Pakistan Chambers
of Commerce & Industry (FPCCI). FICCI and FPCCI are the representatives of the
trade and business community of their respective countries. The main objectives of these
two chambers of commerce is to facilitate trade and business opportunities between India
and Pakistan. Further, their common goal is to increase ethical business activities
between each other and within all South Asian nations. India Pakistan trade relations
are focused along the following lines:

• Trading policies
• Trading procedures
• Trade contracts
• Trade administrative and regulatory procedures
• Trade and investment opportunities
• Business networking for trade

India Pakistan trade relations - policies of India

• Removing government controls and creating an atmosphere of trust and

transparency to promote entrepreneurship, industrialization and trades.
• Simplification of commercial and legal procedures and bringing down transaction
costs.
• Simplification of levies and duties on inputs used in export products.
• Facilitating development of India as a global hub for manufacturing, trading, and
services.
• Facilitating technological and infrastructural upgradation of all the sectors of the
Indian economy, especially through imports, thereby increasing value addition
and productivity, while attaining global standards of quality.
• Neutralizing inverted duty structures and ensuring that India's domestic sectors
are not disadvantaged in the Free Trade Agreements/Regional Trade
Agreements/Preferential Trade Agreements that India enters into, in order to
enhance exports.
• Upgradation of infrastructural network, both physical and virtual, related to the
entire foreign trade chain, to global standards.
• Revitalizing the Board of Trade by redefining its role, giving it due recognition
and inducting foreign trade experts while drafting
• trade policies.
• Involving Indian Embassies as an important member of export strategy and
linking all commercial houses at international locations through an electronic
platform for real time trade intelligence, inquiry and information dissemination.

India Pakistan Trade Relations - Policy of Pakistan

Unlike the previous reservation of foreign investment in manufacturing sectors only, the
new liberal investment policy allows investments in almost all sectors. But the new
investment policy of Pakistan has few reserved sectors, opening up of which may
destabilize Pakistan's internal security. The new policy regime is much more liberal
regarding foreign investment into Pakistan's domestic market. The policy is framed to
help mobilizing domestic financial resources towards long term investment and to add
liquidity to the Pakistan's domestic financial market.

Manufacturing Sector:

• 100% equity holding is allowed to the foreign investors on industrial projects,

which do not require any formal permission from the government of Pakistan.
• No Objection Certificates (NOC) is not required for setting-up a business unit in
Pakistan except for areas that are marked as negative for business development.
• Government permission/sanction is not required for setting up industry, on lines
like:
o Term of business
o Field of activity
o Location of business activity
o Size of business

Strict government protocol is to be followed for making investments in sectors like:

• Radioactive materials
• Arms and ammunitions
• Explosives
• Currency, mint, and security printing
• No new unit for the manufacture of alcoholic beverages or liquors will be allowed

Non-manufacturing sector:

Registration of the companies with Security Exchange Commission of Pakistan under

the Companies Ordinance, 1984 is a must. Further, the State Bank of Pakistan's relevant
provisions are to be met accordingly for making investments in Pakistan or setting up a
business in Pakistan. The government of Pakistan has further eased the investment
norms for the Pakistani repatriates to facilitate investment into Pakistan's domestic
market.

Foreign investment in Pakistani market are now allowed in sectors like:

• Service
• Infrastructure
• Social and Agriculture
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India – Pakistan Trade Relations

Business | June 15, 2010 | Share

“The partition of India (1947) has been the most wounding trauma of the twentieth
century. It has seared the psyche of four plus generations of this subcontinent.”-Jaswant
Singh

India has had bitter relations with Pakistan ever since its creation and the painful
memories of partition continue to weaken these two countries till date. Successive wars,
the unresolved Kashmir issue and terrorist attacks over the past five decades have only
aggravated the situation. The governments of both the nations have constantly tried to
maintain diplomatic relations, but in vain.

According to PM Manmohan Singh, the major reason behind such animosity between
India and Pakistan is trust-deficit. So before improving overall ties a strong base of
mutual trust needs to be built. A major step towards building trust is improving the
economical relations between the two neighbours through trade and business.
Kautilya was the first one to write extensively on ‘Political Economy’ as a separate
subject in Arthashastra. He theorized that to maintain a strong kingdom the king must
develop healthy relations with its neighbouring states through trade. Hence better trade
relations between India and Pakistan will help in building trust as it involves people-to-
people contact, which will eventually contribute towards the improvement of political
relations.

Recently the top political and corporate leaders, CEOs and entrepreneurs of India and
Pakistan met under the ‘Aman ki Asha’ initiative organized by the Times of India group
and the Jang group to discuss peace initiatives between the two nations through better
trade and commerce relations; and urged both the governments to cooperate and help in
realizing the enormous trade potential between these two major South-Asian countries.
Pranab Mukherjee, Finance Minister, emphasized on the need for mutual trust and
interdependence for sustained economic growth of India and Pakistan.

Economic cooperation will definitely lead towards peaceful political relations. Textiles,
information technology, agriculture, health care, energy and education were recognized
as the key sectors with highest trade potential in both countries. Economic cooperation in
these six sectors have been predicted to be convenient and beneficial to both the
countries. Committees for IT and textile sectors have already been set up. Apart from
promoting bilateral trade, the business meet also recommended steps to build public
support and replace the existing trust-deficit with mutual respect and reliance. The need
for easing visa restrictions was also highlighted along with improving the telephone
connectivity between the two countries by allowing cell-phone roaming.

These initiatives will go a long way in improving the economic relations between India
and Pakistan but their success depends on the governments of these two countries and on
how well the people cooperate.

As a matter of fact if India and Pakistan integrate their economies through more trade,
then both the nations can gain a lot. Recorded trade between the two countries is
relatively very small at present even though both of them are members of South Asia
Free Trade Area (SAFTA). The potential of formal trade between these two neighbours is
around 20 times more than the recorded trade. At the time of independence, Indo-Pak
trade relations were very strong – 70% of Pakistan’s trade transactions were with India
and 63% of India’s exports were to Pakistan. This came down drastically over the years
and in 2008 Indo-Pak trade statistical figures lingered around a mere 1%. There are a
number of reasons behind this – high tariffs, trade barriers, poor infrastructure, costly
transportation, excessively disproportionate red tape, bureaucratic indolence, strict
regulations on visa and custom procedures and major political conflicts.

While India granted MFN (most favored nation) status to Pakistan in 1995-96, Pakistan
has still not reciprocated. As a result there is no standard tariff on Indian products in
Pakistan. High import duties and other non-tariff barriers have crippled the Indo-Pak
trade relation with virtually no foreign direct investment (FDI) flows at present.
Ironically, Pakistan needs 140 million kg of tea annually. India even though being its
immediate neighbour contributes only five million due to 30% tariff on Indian tea. The
cost of Zinetac, a medicine for acidity, is Rs 7.20 per 10 tablets in India but around Rs.
100 in Pakistan. There are a number of other such instances where India produces the
goods needed in Pakistan but their export to Pakistan is very low due to strict restrictions.
As a result smuggling through third countries and underground routes is becoming
rampant. Thus, depriving both the economies of profit from bilateral trade and driving the
prices further up.

Many people are against the free flow of trade between India and Pakistan. Some fear
that this will lead to an economic invasion of Pakistan while others fear that it will
facilitate terrorist activities. Indo-Pak trade relations can not be changed overnight. But
winds of change are certainly flowing in the right direction. But before people welcome
these winds, certain measures need to be taken. The mind-set of the people needs to be
changed first to build public support for liberal trade relations. People of both the
countries need to open up but also remain cautious of the negative activities. Better trade
between India and Pakistan will benefit both the countries by raising their GDP and
household incomes. Strong economic relations will serve as a catalyst towards the peace-
building process.

While doing a research project on Partition of India last year, I realized that there is a
very long way to go before the animosity in people’s heart completely dissolves and they
open up to each other. The relationship between India and Pakistan is one marked by
nostalgia and pain. The people of these two countries were once upon a time ONE but the
colonial era ruined the unity. Nonetheless, the people of India and Pakistan have been
traders for a long time. And now is the right time to renew this connection through trade
and commerce and let economics guide politics for a change.

Mahima Taneja

(4 votes, average: 3.75 out of 5)

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India-Pakistan trade takes a terrorist hit
By Raja Murthy

MUMBAI - Bilateral trade between India and Pakistan,

considered a vital aspect in improving the prospects for New delhi
sub-continental peace, have become a victim of the
terrorist attacks on cricketers this month in Lahore in Hotels
Pakistan and on civilians late last year in Mumbai in India.

Terrorism is being cited alongside the global downturn for Maldives

a forecast 60% plunge in trade volumes between India and
Pakistan in the financial year about to start, according to Hotels
the Federation of Indian Chamber of Commerce and
Industry (FICCI).
Sri lanka
Bilateral trade between Pakistan and India will probably Terror's guns don't
fall to US$900 million in the year ending March 31, 2010, discriminate
(Mar 5,'09)
Hotels
compared with
Pakistan's militants
ready for more
Manila Ho
(Mar 5,'09)

Zardari draws a blank Bali Hotels

from China visit (Feb
26,'09)

Korea Hot
1. Obama and his magic
lamp
2. Join the saved
minority
3. Trade-off season on
Afghanistan begins
4. Ahmadinejad
really is the man in
charge
5. Shining through
the darkness
6. Work makes a
comeback
7. A futile search for
'moderate' Taliban
8. China's renegade
patriot faces backlash