India and Pakistan should work together in eliminating barriers such as lack of transport infrastructure and procedural problems to boost bilateral trade, economic think-tank CUTS International (Consumer Utility and Trust Society) today said.
“While recent tariff liberalisation is giving a boost to trade between India and Pakistan, non-tariff barriers, especially deficiency in transport infrastructure and procedural opacity, are contributing significantly to the cost of doing cross-border trade,” it said.
Pakistan is importing several items at high prices from other countries, although India has the capacity to export them at lower prices, it added.
“Aviation spirit, light petroleum distillates, gold and silver jewellery and iron ores are some of the most prominent potential export items from India which face significant non-tariff barriers in Pakistan,” the CUTS said in a statement.
India could gain about $80 million if non-trade barriers on the Indian side are removed for facilitating cheaper imports from Pakistan in about 13 main product categories, it added.
Similarly, in about nine major product categories, Pakistan stands to gain $1.4 billion if it reduces barriers for imports from India.The bilateral trade is currently at $2.6 billion.
“The current volume of trade between India and Pakistan is found to be far below potential and both countries are foregoing huge welfare gains by not acting proactively to facilitate growth in bilateral trade,” it said.
Finding solutions for removing non-tariff barriers is the most yielding area of policy reform for bilateral trade to grow beyond status quo, CUTS mentioned.
“It is estimated that roughly $3 billion worth of informal trade happens between the countries, which can be brought into the mainstream through better trade facilitation measures,” it said.
CUTS even mentioned that most of the informal exports from India to Pakistan constitutes mainly readymade garments, jewellery and spices and are routed through major ports like Dubai and Singapore.
“One of the reasons often cited by Indian exporters is the reluctance of Pakistani authorities to permit trade in a wider range of commodities through land routes,” it explained.
CUTS International, in partnership with the Islamabad-based Sustainable Development Policy Institute and the London-based Market Access Portal Ltd, has initiated a project on potential benefits of reduction in non-tariff barriers in Indo-Pak trade.
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