New Delhi, April 29: Indian exporters believe trade with Pakistan can jump to $10 billion in three years following a joint statement by the two neighbours on ways to improve their economic relations.
The bilateral trade will cross $10 billion in the next three years as the focus of the joint communique is on the removal of non-tariff barrier which is the key to trade expansion, Ramu Deora, president of the Federation of Indian Export Organisations (Fieo), said.
Exporters are upbeat because the statement refers to immediate necessary steps to end the discriminatory trade regime.
Indias trade with Pakistan is just about $2 billion of its global merchandise trade of $595 billion.
According to a study by the Indian Council for Research on International Economic Relations (Icrier), the potential of India-Pakistan trade is $14.3 billion with India exporting goods of about $11 billion and importing $3 billion.
At present, trade between the two countries is at $2 billion, while indirect trade routed through third countries is estimated at another $2 billion.
Other studies said trade through third countries such as the United Arab Emirates was much higher at around $3-$5 billion.
The two sides have agreed to consider the possibility of a preferential trade deal, ease curbs on investment and banking and relax the rules for issuing business visas.
Businesses can act as a bridge between nations to build political relationships. It is business which is followed by political relationship, CII president B. Muthuraman said.
The business community is keen to do business with Pakistan, the Federation of Indian Chambers of Commerce and Industry (Ficci) said.
Analysts said a preferential trade deal would allow the lowering of tariffs or even duty-free import.
The relaxations on investment and banking are significant in the light of the bar on Pakistani investments and banks in the country.
Officials said relations would be strengthened by the decision to do away with the current positive list (of items that can be traded) with a negative list (a small list of products that require protection and, hence, cannot be traded) within the next six months.
The two sides agreed to examine in two months how to initiate and expand trade in all types of petroleum products and study the feasibility of electricity trade.
Fieo would be taking steps to set up a joint chamber with its counterpart in Pakistan.
According to the joint statement issued after the talks of the commerce secretaries, Pakistan recognised that grant of MFN (most favoured nation) status to India would help in expanding bilateral trade relations.
According to Ficci, potential sectors for trade are agriculture, textiles, surgical goods and plastics.