New Delhi, April 17: India and Pakistan today agreed to set up a joint business council to promote bilateral trade which has failed to take off in the past because of the hostile atmosphere.
The decision was taken at the meeting between President Pervez Musharraf and Prime Minister Manmohan Singh this morning.
'We have agreed to set up a joint business council to facilitate interaction among business and to strengthen economic ties and promote trade,' commerce minister Kamal Nath said.
He added that the chambers of the two countries would meet to work out the nitty-gritties for setting up the council.
Nath also announced that on the directive of the Prime Minister, Delhi has agreed to lift any 'perceived' non-tariff barriers coming in the way of Pakistani trade ' especially in textiles ' to India.
A joint study group that had been established will meet in June to sort out specific issues.
Even though India has accorded the most favoured nation (MFN) status to Pakistani exports, it has had to contend with a ban on most of the goods that it is capable of sending to that country.
Pakistan had refused to reciprocate the MFN status though such a gesture is expected as part of the World Trade Organisation commitments. However, Pakistan indicated today that it could move forward on this front.
A delegation of Pakistani textile exporters had met Nath in September last year to seek tariff concessions under the South Asia Free Trade Agreement for their goods.
The delegation said Pakistan was not competing with India in textile exports as it was concentrating mainly on home furnishings. India has a more diverse range of products.
The delegation said Pakistan, in turn, would be keen to import textile machinery, dyes and chemicals from India, which it was sourcing from elsewhere.
This could be a starting point and business communities on both sides could become drivers of the bilateral partnership.
During 2003-04, India's exports to Pakistan stood at Rs 1,051 crore, compared to Rs 998 crore in the previous year, which represents a growth of 32 per cent.
Pakistan's exports to India during 2003-04 touched Rs 265 crore, up from Rs 217 crore in 2002-03. The major items of import from Pakistan were fruits, nuts and pulses.
Indo-Pak trade is way below the actual potential. Many Indian goods make their way to Pakistan through third countries.
Another item of common interest is sugar. Pakistan had in the past put an abrupt end to sugar imports from India even though it was getting the commodity at a price cheaper than what other countries were offering.
India enjoys a transport cost advantage because of its proximity to Pakistan compared to the huge shipping freight that other sugar exporting countries like Brazil have to incur.
Petroleum minister Mani Shankar Aiyar had in September last year discussed with Pakistan foreign minister Khursheed Mehmood Kasuri the possibility of India exporting diesel and petrochemicals. But the move did not make much headway.
If Indian Oil is permitted to supply fuel, Pakistan can save on transportation cost. However, Pakistan enjoys a fraternal relationship with West Asia, from where it gets petroleum products at concessional prices. It will, thus, not like to upset this apple cart.