Pakistan will phase out major restrictions on Indian imports by the end of this year, the government said Wednesday, in a bid to normalise trade with its nuclear-armed neighbour.
Information Minister Firdous Ashiq Awan said Islamabad will gradually scrap a “negative list”, which bans hundreds of items from India and places barriers on other trade.
“Normalising trade ties with India is in the interest of Pakistan as it would not only help strengthen the national economy but boost economic activities in the region also,” Awan told reporters.
The government “decided in principle to phase out the negative list between the two countries by December 31, 2012, which will complete the trade normalisation process”, she said.
Deepening economic engagement between the two countries, which have fought three wars since independence from Britain in 1947, is seen as crucial to establishing lasting peace in the troubled South Asian region.
India’s Associated Chambers of Commerce and Industry (ASSOCHAM) welcomed Pakistan’s announcement, saying the move will increase cross-border trade to over $6 billion by 2014.
Direct trade between India and Pakistan currently constitutes less than one percent of their respective global trade. India exported goods worth $2.33 billion to Pakistan last year while its imports were $330 million.
“The steps will also lead to negotiations to step up investments by businessmen in both the countries,” said D.S. Rawat, secretary general of ASSOCHAM.
In 1996, India granted Pakistan “most preferred nation” status which is intended to remove discriminatory higher pricing and duty tariffs.
Pakistan agreed in principle to grant a similar status to India last year, paving the way for a radical reorganisation of trade.
At present, Pakistan maintains a list of 1,945 items allowed to run from India to Pakistan — but only 108 can be transported directly by road through the Wagah border in Punjab.
Major items of export from India to Pakistan are sugar, cotton, man-made filaments and chemicals, while its top imports from Pakistan include fruit, mineral fuels, and organic chemicals.