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Last Updated: Thursday, 26 February, 2004, 17:21 GMT
India-Pakistan thaw benefits trade
By Monica Gupta
BBC correspondent in Delhi

Attempts to normalise relations between India and Pakistan appear to have benefited Pakistan's trade with India.

Indian Prime Minister Atal Behari Vajpayee (R) and Pakistani Prime Minister Zafarullah Jamali
The warming of relations has businessmen seeing dollar signs
Indian commerce ministry data shows that Pakistan's exports to India from April to September 2003 have more than doubled to $32m, up from $15m in the corresponding period last year.

Interestingly, India's exports to Pakistan during the same six month period have declined to around $68m, from $107m during April to September in 2002.

India's Trade and Commerce Minister Arun Jaitley is not unduly worried about the increase in Pakistani imports.

Saarc's importance

"I would not give too much importance to these figures. Even today the overall trade balance [with Pakistan] is in our favour," he told reporters.

"Also with our foreign exchange reserves increasing substantially, these figures are quite irrelevant."

Textiles is one area where the two countries should work together to tackle competition from China once the textile quotas are removed in December this year
M Zubair Motiwala

He says the decision to implement free trade area in the South Asian Association for Regional Co-operation (Saarc) region by 2006 and attempts to normalise relations between India and Pakistan, will mean bilateral trade will increase.

Meanwhile, a 30-member delegation of Pakistani businessmen from the Karachi Chamber of Commerce and Industry (KCCI) visiting India says it is keen to develop joint ventures in areas of common interest.

"Textiles is one area where the two countries should work together to tackle competition from China once the textile quotas are removed in December this year," says M Zubair Motiwala from the group.

Price differences

Bilateral trade between the two countries from 2001 to 2002 was pegged at around $200m. However, unofficial trade is estimated to be close to $2bn. According to experts there is potential to increase bilateral trade to $3bn-4bn.

Existing trade barriers between the two countries have come in way of businessmen taking advantage of price differentials.

For example, cars in India are nearly 40% cheaper than in Pakistan; drugs in Pakistan are four times the cost of those in India.

Raw cotton, pulses and dry fruits, however, are cheaper in Pakistan.

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