India's trade potential with Pak: $4 bn

NEW DELHI: When the PMs of India and Pakistan spoke on the phone last week, the K-word was not used. Instead, it was Dial B for business with leaders in both countries realising it was time to tap the subcontinent’s economic potential.
For economic experts, this is the only road ahead. Says A C Muthaiah, president, FICCI: “India-Pakistan relations can be resuscitated with business taking the lead.There is great optimism amongst on both sides.�
Consider these figures:
l India’s total trade with Pakistan in 2001-2002 was $ 204 million.
l Unofficially, the figure is between $ 1-6 billion, five times the official figure.
l India’s official trade with Bangladesh — the size of its economy is a third of Pakistan’s — is $1 billion.
l If India-Pakistan relations were to improve, the official figure could go upto $ 3-4 billion in the next two to three years.
FICCI shared these with Sunday Times, while taking a fresh look at India-Pakistan trade and its latent potential. Amit Mitra, FICCI secretary-general, has already spoken to his counterpart Sheikh Jamal Mehboob Maghoom of the India-Pakistan Chamber of Commerce and Industry on Saturday morning. Says Mitra: “They are very excited, there is so much accumulated energy on both sides, that the moment the wall crumbles it will gush out.� Maghoom has promised to travel to India with a business delegation as soon as the political environment is more conducive.
Industry experts on why the wall must crumble:
l A direct flight from Delhi to Lahore takes two hours and costs Rs 6,675 on business class, but via Dubai it takes all day and costs Rs 57,250.
l Recently, a cotton mill in Karachi refurbished its machinery. Every component went from a major textile machinery manufacturer in South India. It was shipped to Dubai, then to Karachi. Pakistani’s paid more, Indians got nothing.
l Apollo tyres is the biggest tyre brand in Pakistan. It’s common knowledge that they are smuggled through Dubai, Singapore, or the porous border, as the import duties are as high as 46 per cent.
l A consignment of cement was being transported to Pakistan on the Samjhauta Express. But the paperwork was such that it took three months for it to get there. By the time it reached, the cement had turned into concrete.
l Pakistan has banned the entry of Indian entertainment products such as film and music since 1954. But, as Amit Khanna, chairman of Reliance Entertainment puts it: “It is the sorest point after Kashmir.� Indian films and music is virtually mainstream entertainment in Pakistan. Unofficial estimates put the piracy market at Rs 1,000 crore.
A trade region encompassing India and Pakistan could change all this (See box). Says Maghoom: “We could be world beaters if we were to put our heads together, this bickering is meaningless.� So, is there a good place to start? India feels Pakistan should award it most favoured nation status.
However, Mitra feels ‘Non-Discriminatory Status’ would be a more prgamatic term since the biggest problem is the vocabulary trap on both sides. MFN loosely translates as sabse pyara mulk, which seems to be too positive a status for Pakistan to award India. Nevertheless, Maghoom, represents the trade view by saying: “Let’s go for it!�