A new report of the World Bank revealed that Pakistan and India bilateral trade potential of $37 billion is not being achieved. However, the informal trade between Pakistan and India has almost doubled. ‘Glass Half Full: The Promise of Regional Trade in South Asia’ report unveiled that Pak-India trade could have been 15-fold more than the present level. The report said that it is important both the countries understand their full trading potential.
Four hurdles to regional trade were identified. They are tariffs, real and supposed non-tariff obstacles, connectivity costs, and wider trust issues. This report was released by the World Bank when the PTI government has come to power in Pakistan. The Pakistan Tehreek-e-Insaf government has shown that it wants to increase bilateral trade with India but the India government seems hesitant.
Even though Pakistan and India overall represent 88% of the gross domestic product (GDP) of South Asia the trade between them is just a little over $2 billion. World Bank said that more trade needs to be done through the Wagah-Attari border which is cheaper than the sea route.
Kathuria emphasized that South Asia Free Trade Agreement (Safta) will be not effective if India and Pakistan do not trade with each other.
World Bank Country Director for Pakistan Illango Patchamuthu said, “A favorable trading regime that reduces high costs and eliminates barriers could boost investment opportunities that are critically required for accelerating growth in the country.”
World Bank Director Macroeconomics, Trade, and Investment Caroline Freund said, “The contribution of exports to the total national output of Pakistan is just 10% and the country can no more sustain consumption-led growth.”
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