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http://www.thehindu.com/business/Ec...otential-is-198-bn-icrier/article4365501.ece/
A study carried out by Nisha Taneja of ICRIER on
``Enhancing India-Pakistan Trade, states that for
stronger trade links, it is important that there are
foreign investment flows between the two
countries. Stating that the huge bilateral trade potential
between India and Pakistan -- estimated to be
$19.8 billion -- needs to be exploited, Indian
Council for Research on International Economic
Relations (ICRIER) has pitched for an investment
treaty between the two neighbours. A study carried out by Nisha Taneja of ICRIER on
``Enhancing India-Pakistan Trade, states that for
stronger trade links, it is important that there are
foreign investment flows between the two
countries. India has permitted investment in and
from Pakistan. ``If a bilateral investment treaty is put in place, it will improve business confidence
to invest in the other country, the study states. Dr. Taneja said this study assesses trade
possibilities between the two countries,
examines the physical and regulatory
impediments to realising the trade potential and
suggests how the potential can be realised. The study states the trade potential of $19.8
billion is 10 times larger than the current $1.97
billion in official trade. Of this, export potential
accounts for $16 billion and import potential
accounts for $3.8 billion. The potential in mineral
fuels is another $10.7 billion, of which export potential accounts for $9.4 billion and import
potential $1.3 billion. It states the three categories with the largest
export potential from India to Pakistan are
machinery, mechanical appliances, electrical
equipment, chemicals and textiles, accounting for
54 per cent of total export potential. At a
disaggregated level, the largest potential items include cellular phones, cotton, vehicle
components, polypropylene, xylene, tea, textured
yarn, synthetic fibre and polyethylene. The three
categories with the largest import potential to
India from Pakistan include textiles, jewellery
and precious metals, and base metals, accounting for 45 per cent. The items with largest import
potential include jewellery, medical instruments
and appliances, cotton, tubes and pipes of iron
and steel, polyethylene terephthalate, copper
waste and scrap, structures and parts of
structures, terephthalic acid and its salts, medicines, and sports equipment. Interestingly, the study points out that a
substantial proportion of Indias export potential,
which is around 58 per cent, is in products that
are on Pakistans negative list for India or on the
sensitive list applicable to India under the South
Asian Free Trade Area (SAFTA) agreement. Similarly, 32 per cent of Indias import potential
from Pakistan is in items on the sensitive list for
Pakistan applicable under SAFTA. Indias sensitive list under SAFTA applicable to
Pakistan indicates that the textiles sector is
protected the most -- a sector in which Pakistan
enjoys a comparative advantage. Most of the
items on the sensitive list are fabrics, which if
allowed at preferential lower tariffs into India will compete with large firms, rather than small
firms, that produce comparable quality. Even
though these firms are likely to oppose
liberalisation, there is no rationale to protect large
firms, it states. There are also opportunities in the services
sectors such as information technology and
business process outsourcing, health care, and
entertainment. These services would require the
movement of people to consume and provide
services.
A study carried out by Nisha Taneja of ICRIER on
``Enhancing India-Pakistan Trade, states that for
stronger trade links, it is important that there are
foreign investment flows between the two
countries. Stating that the huge bilateral trade potential
between India and Pakistan -- estimated to be
$19.8 billion -- needs to be exploited, Indian
Council for Research on International Economic
Relations (ICRIER) has pitched for an investment
treaty between the two neighbours. A study carried out by Nisha Taneja of ICRIER on
``Enhancing India-Pakistan Trade, states that for
stronger trade links, it is important that there are
foreign investment flows between the two
countries. India has permitted investment in and
from Pakistan. ``If a bilateral investment treaty is put in place, it will improve business confidence
to invest in the other country, the study states. Dr. Taneja said this study assesses trade
possibilities between the two countries,
examines the physical and regulatory
impediments to realising the trade potential and
suggests how the potential can be realised. The study states the trade potential of $19.8
billion is 10 times larger than the current $1.97
billion in official trade. Of this, export potential
accounts for $16 billion and import potential
accounts for $3.8 billion. The potential in mineral
fuels is another $10.7 billion, of which export potential accounts for $9.4 billion and import
potential $1.3 billion. It states the three categories with the largest
export potential from India to Pakistan are
machinery, mechanical appliances, electrical
equipment, chemicals and textiles, accounting for
54 per cent of total export potential. At a
disaggregated level, the largest potential items include cellular phones, cotton, vehicle
components, polypropylene, xylene, tea, textured
yarn, synthetic fibre and polyethylene. The three
categories with the largest import potential to
India from Pakistan include textiles, jewellery
and precious metals, and base metals, accounting for 45 per cent. The items with largest import
potential include jewellery, medical instruments
and appliances, cotton, tubes and pipes of iron
and steel, polyethylene terephthalate, copper
waste and scrap, structures and parts of
structures, terephthalic acid and its salts, medicines, and sports equipment. Interestingly, the study points out that a
substantial proportion of Indias export potential,
which is around 58 per cent, is in products that
are on Pakistans negative list for India or on the
sensitive list applicable to India under the South
Asian Free Trade Area (SAFTA) agreement. Similarly, 32 per cent of Indias import potential
from Pakistan is in items on the sensitive list for
Pakistan applicable under SAFTA. Indias sensitive list under SAFTA applicable to
Pakistan indicates that the textiles sector is
protected the most -- a sector in which Pakistan
enjoys a comparative advantage. Most of the
items on the sensitive list are fabrics, which if
allowed at preferential lower tariffs into India will compete with large firms, rather than small
firms, that produce comparable quality. Even
though these firms are likely to oppose
liberalisation, there is no rationale to protect large
firms, it states. There are also opportunities in the services
sectors such as information technology and
business process outsourcing, health care, and
entertainment. These services would require the
movement of people to consume and provide
services.
