Indo-Pak trade could jump to 10 times the current amount

Removal of tariff and non-tariff barriers between India and Pakistan could result in at least 10 times jump in bi-lateral trade between the two countries and could jump to even USD 50 billion, a US think-tank said in a report released on Wednesday.

The conclusion of New America Foundation -– a Washington-based eminent American think-tank -- is based on analysis of two eminent economists, one from India and another from Pakistan.

"Both reports demonstrate the removal of tariff and non-tariff barriers could result in an expansion of trade between the two countries from its current value of USD 2 to USD 2.5 billion to estimates ranging from USD 20 to USD 50 billion," the New America Foundation said, referring to the reports of two economists Pakistani Mohsin Khan and Indian Nisha Taneja, which it had commissioned.

Khan's report, 'India-Pakistan Trade Relations: A New Beginning' acknowledges that Pakistan will have both winners and losers in result of opening of trade relations, but the number of new opportunities it would bring to the country's struggling economy would outweigh any pain that could also occur.

For example, Pakistan's automobile and pharmaceutical industry would likely suffer from free trade with India, but the entire nation would gain access to India's more advanced technology and machinery, it said.

Similarly, Taneja, a professor with the Indian Council for Research on International Economic Relations in New Delhi, found the Indian goods with the most potential for export to Pakistan include machinery, mechanical appliances, and electrical goods.

And according to her report, enhancing India-Pakistan trade, the items India would most likely import from Pakistan include textiles, jewellery, and precious metals, the US think-tank said.

According to the New America Foundation, though the Pakistani and Indian governments have recently made moves toward improving trade relations — exemplified in Pakistan’s granting of Most Favoured Nation (MFN) status to India, business owners in both countries still fear the political backlash that might occur if they sell their products on the other side of the border.

Restrictive visa regimes and insufficient transportation systems across the border continue to depress trade and investment exchanges, the think-tank said.

It added that both Khan and Taneja outline reason for hope in their illuminating reports but also note many hurdles will need to be overcome before the two nations can claim full economic ties.