The India-Pakistan trade could increase from the current $2 billion to $37 billion if both the nations get rid of the artificial trade barriers, as reported by World Bank on Wednesday.
India’s informal trade with Pakistan makes ninety-one per cent of the formal trade, as per the report by World Bank. The report is dubbed as “A Glass Half Full: The Promise of Regional Trade in South Asia”. Several of these commodities are exported from India to Pakistan via third nations, mostly the United Arab Emirates.
Pakistan only permits only one hundred and thirty-eight items to be imported from India over the Attari—Wagah land route. The port barriers counterbalance the benefit of geographical closeness, which should head to low transition costs and time between the states or provinces in the Northern India and Pakistan and hence enhances trade.
India gave Pakistan “most-favoured-nation” status or non-discriminatory market access in the year 1996, under the World Trade Organization. However, the same status has not been granted to India by Pakistan as yet.
The complicated kind of relationships between India and Pakistan have negatively affected the bilateral trade as well as trade within the region, as reported by the World Bank. The two nations account for eighty-eight per cent of South Asia’s gross domestic product and eighty-six per cent of its population.
Both nations have reduced tariffs to a limit of five per cent under the South Asian Free Trade Area (SAFTA). India has decreased the tariffs to zero on the imports from the least developed nations.
India with six hundred and fourteen items and Pakistan with nine hundred and thirty-six items continue to have long lists of sensitive commodities, which includes items on which no tariff concessions are given.
The privileged access given to Pakistan on 82.1 per cent of tariff lines under SAFTA is also partially blocked in the case of India because Pakistan has got a negative list comprising of one thousand two hundred and nine commodities that cannot be imported from India.