BILATERAL TRADE

AGREEMENT BETWEEN
INDIA & PAKISTAN
Presented by:
Sumanjit Deb (32)
Paper : MM-3205
Status of intra-regional trade in South
Asia
• Intra regional trade have registered some growth
overtime, it still remains rather insignificant
when compared to other regional trading blocks.
• Trade within South Asia is dominated by India,
which accounts for 65% of total intra-regional
trade.
• For Pakistan, the share of intra-regional trade
has declined from 24.5% in 1980 to 19.8% in
2008.
Composition of intra-regional traded
products in South Asia

Raw material &

Primary Finished products
intermediate
Products products
•Cotton •Stone & sand
•Limestone •Pig and Sponge iron
•Cotton yarn •Lime
•Motor cars
•Vegetables •Cement
•Motorcycles
•Hydrocarbons •Textile yarn
•Bituminous oil •Jute fibers
•Natural rubber •Fertilizer
•Flour
• More than 55% of Trading Gap between
actual and
Partners
South Asia intra- preferential
trade (%)
regional trade Bangladesh Pakistan 75.0
potential has not
been tapped. Bangladesh Sri- 94.8
Lanka

India Pakistan 81.9

Pakistan Sri- 66.7

Lanka

South Asia 55.7

Source: Human
Development
Centre(MHHDC)
Indo-Pak Trade

• India and Pakistan have no formal trade agreement.

• Trade between these two countries has been abnormally low.

Pakistan accounts for less than 1% of India’s trade and India

accounts for approximately 5% of Pakistan’s trade. 

• India has granted Most Favoured Nation Status to Pakistan

since 1996, whereas Pakistan maintains a List of Importable Items

from India called ‘Positive List’ which now consists of 1938

items. 
Contd…..
• There was a major breakthrough in trade relations at the meeting between

then President Pervez Musharraf of Pakistan and Prime Minister

Manmohan Singh of India in New Delhi in April 2005 (Joint

Communiqué 2005). A number of trade-related issues were discussed at

this meeting, and several key decisions were taken to move the

process along.

• Both countries had  also constituted a Joint Study Group (JSG) at the

level of Commerce Secretary; its first meeting was held in February 2005 

and the last (third meeting) in New Delhi on 2nd August 2007. 
Contd…..
• Apart from Joint Study Group, the issues pertaining
to commercial and economic cooperation are
also discussed at Commerce Secretary level within
the framework of the Composite Dialogue.  The
fourth round of dialogue was held in New Delhi on
31 July – 1 August 2007. 
• Currently, official trade between India & Pakistan is
about $2 billion per year, up from a paltry $300
million a year in 2003–04.
 Pakistan's Exports from India: 2000-
02 (rupees)
  2001-02 2000-01
Total Exports Rs 3,246,436 Rs 2,777,405
  % %
Agriculture and Food 66
66
(Dates) (35)
(42)
(Rice) (23)
Asafoetida 5 -
Crude Petroleum - 8
Cotton staple - 10
Cotton yarn and related 18 5
(Cotton tents) (12) (-)

Source: Federal Bureau of Statistics, Annual Trade Statistics 2001-02, Government of Pakistan, Islamabad, 2003 .
 Pakistan's Imports from India: 2000-02 (rupees)

2001-02 2000-01
Total Imports  Rs 11,471,155 Rs 13,928,480
  % %
Agriculture and Food 16 53
(Sugar)  (10) (39)
Iron and manganese ore 9 6
Chemicals 38 21
(Pure Xylenes)  (17) (1)
Medicinal inputs 4 2
 Plastics 8 4
Tyres and Rubber 7 4

Source: Federal Bureau of Statistics, Annual Trade Statistics 2001-02, Government of Pakistan, Islamabad, 2003 .
 Discriminatory steps by Pakistan:
 Not implementing SAFTA provisions to Indo-Pakistan trade
 Maintaining a narrow positive list of goods that India can
export to Pakistan.
 Not granting the MFN status to India
 Discriminatory steps by India:
 India has maintained high tariff rates and non-tariff
barriers on goods of particular interest to Pakistan.
STRATEGIES FOR INCREASING TRADE
1.Enhance Indo-Pak trade
Short-term measures include:
 Easing business visa processes.
 Increasing the number of border crossings.
 Improving regional road, rail and port links.
 Increasing air links between the two countries.
 Allowing branches of Indian and Pakistani banks to
operate in the other country and allowing banks in one
country to hold accounts in the currency of the other.
Medium-term measures involve:
 Pakistan granting the MFN status to India and allowing
transit trade,
 India reducing the tariff rate on products of trading
interest to Pakistan,
 India reducing non-tariff barriers, especially on
agricultural products.
 Pakistan should allow transit trade from India.
 Energy trade between the two countries should be
facilitated.
 Both countries should also allow trade in
information technology (IT).
2. Strengthen SAFTA
 Accelerate and stringently follow the schedule for tariff
cuts.
 Reduce the sensitive list to broaden coverage.
 Include commitments and specify a time frame to reduce
non-tariff barriers.
 Improve the mobility of people by opening the visa
regime within SAARC.
3. Incorporate trade in services in SAFTA
 Since trade in services does not involve the movement
of goods, it is easier to implement. Prioritizing the
liberalization of the service sector can realize the
intended benefits.
 Financial markets within the region should be
broadened and cross-border investment must be
promoted.
Thank You