Pranab calls for increased India-Pakistan trade

"A more economically integrated and rapidly developing region could generate a peace dividend. Extended trade relationships would reduce potential for conflict by creating strong constituencies for peace," said Mukherjee, addressing an Indo-Pak business meet here.

The meet was organised jointly by the Confederation of Indian Industry, the Pakistan-India CEOs Business Forum and two media groups of south Asia, Times of India and Jang of Pakistan.

A Pakistani business delegation, including leaders from various sectors such as textiles, agriculture and IT are participating in the meet.

Bilateral trade between India and Pakistan is too small compared to the overall trade basket of the two countries. Most of the trade also takes place through the third- country route.

"Due to geographical proximities, there is a tremendous scope of cheaper transportation costs. The shorter distance will render it unnecessary for the industry to carry higher level of inventories of raw materials and parts, thereby reducing costs of operations," said Mukherjee, stressing the need for free movement of goods between the two countries.

Trade between the two countries grew from $251 million in 2000-01 to $2.3 billion in 2007-08, but dropped 19 percent to $1.81 billion in 2008-09.