Indo-Pak relations

Pushing their trade diplomacy amid differences over a host of issues like cross-border terror, India and Pakistan have agreed to jointly double bilateral trade to six billion US dollars annually and decided to liberalize their visa regime for businessmen of both countries. These were some of the measures arrived at to revamp frayed commercial ties that could help bolster a fragile peace process between the two countries.

The achievement in talks between Pakistan's Commerce Minister Makhdoom Amin Fahim and his Indian counterpart Anand Sharma, though modest, has all the potential to improve ragged ties that were broken off after the Mumbai terror attacks in 2008.

A strategic opportunity

Issues like opening trading posts to stamping more business and allowing banks to open branches in each other's countries were on the agenda with a view to liberalizing bilateral trade. As part of the agreements reached Pakistan will also allow India to export more goods to the Pakistani market, including gasoline.

Addressing a business meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), Fahim, - the first Pakistani commerce minister to visit India in 35 years –said, "Normalisation of trade relations between India and Pakistan could thus be a vehicle to facilitate resolution of other political issues between the two countries. This would create more chances of the composite dialogue between India and Pakistan."

Reciprocating this sentiment, his Indian counterpart Sharma said, "We engaged in a frank, open and constructive manner and our discussions will define the future roadmap of our engagement."

India also agreed to drop its objections to a flood relief package that the EU wanted to extend to Pakistan. "In the next meeting of the WTO, we will express our support for the package," Sharma added.

'A golden opportunity'

Business leaders affirmed that fully normalised commercial ties would strengthen the bilateral relationship and build the bridges of friendship, trust and understanding for mutual benefit of their people and promotion of prosperity in South Asia.

"More business visas should be stamped to facilitate stronger trade ties between the two countries," said DHL Express vice president (South Asia) Ramesh Natarajan.

"I see this as a golden opportunity. Trade ties have been on the backburner for a long time. This impetus is important for overall improvement on all fronts," remarked Darjul Awasti, an industrialist in Mumbai.

The India Trade Promotion Organisation (ITPO) and Trade Promotion Authority of Pakistan signed a Memorandum of Understanding aimed at facilitating bilateral trade.

The two organisations will organise road shows and trade fairs and suggest measures to promote trade. The role of the two bodies is important as the two countries aim to increase their trade to six billion US dollars in three years, from the current 2.7 billion. Formal trade between India and Pakistan had increased to 1.8 billion US dollars from 616 million in 2009-2010.

Welcomed outcome

The European Union has welcomed the outcome of the bilateral trade talks between India and Pakistan.

"It is very positive that India has decided to withdraw the objections to the WTO waiver sought by the EU for granting duty free access for certain goods from Pakistan to the EU market," said a statement.

Only time will tell whether normalisation of trade relations between India and Pakistan could prove a catalyst to smoothen out the of resolution of other contentious political issues dogging both countries. But this would at least create more opportunties for the success of the stalled composite dialogue between India and Pakistan.

The meeting between the commerce ministers of India and Pakistan is part of the slow normalization of relations between the two counties, a process that started in Thimphu, Bhutan in February this year leading up to talks between the foreign ministers of the two countries in July.

Author: Murali Krishnan
Editor: Grahame Lucas