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Updated: February 7, 2013 09:39 IST

Breaking down barriers

Sujay Mehdudia
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Bringing together trade and people: At the Attari-Wagah border.
Bringing together trade and people: At the Attari-Wagah border.

Notwithstanding skirmishes at the border, liberalisation of visa regime is the key to realisation of trade potential between India and Pakistan, says a new study

At a time when simmering tensions at the Line of Control (LoC) have hogged the limelight putting the India-Pakistan ties under strain, civil society members and the India Council for Research on International Economic Relations (ICRIER) feels that both the countries should go ahead with the liberal visa regime and dismantling of the non-tariff barriers to bring people of the two countries together and reap the real benefits of the huge trade potential.

“A key determinant of the realisation of trade potential is the liberalisation of visas. The revised visa regime provides only an incremental improvement over the existing system. The two countries should move to a more liberal visa regime without compromising on security,” said Dr. Nisha Taneja, who has carried out a study for ICRIER on India-Pakistan trade and its potential.

The study pointed out that non-tariff barriers have been a key issue with Pakistani business people while accessing the Indian market. While there are genuine non-tariff barriers related to the complexity of regulatory procedures, non-transparent regulations, port restrictions, and problems related to recognition of standards and valuation of goods, these are not discriminatory and are being addressed in India’s ongoing reform process.

"It is more difficult to address ‘perceived barriers’ that business people face in entering each other’s markets. Business people fear entering these markets as they are not sure their goods will be welcomed. This is more so in the consumer goods market segment. However, there is evidence that some businesses have made a bold entry with their country labels and have not met much resistance. Exhibitions and fairs are an effective way of dealing with these perceived barriers," the study states.

Even as tariff and non-tariff barriers are lowered, informal trade is likely to co-exist with formal trade for some time. Third-country traders have played a dual role as facilitators and guarantors of trade transactions between Indian and Pakistani traders. Until business partnerships can materialise through market forces, payments can be ensured, and trust in business relationships can be established, informal trade may not shift to formal channels.

On the other hand, Amin Hashwani, director of Hashwani Group of Industries and a strong proponent of Indo-Pak bonhomie, felt that it was high time that civil society played a major role in shaping, cementing and giving direction to the relationship between the two countries. “Civil society has to play a major role in bringing the two countries close and removing discrepancies or turmoil in the relationship between India and Pakistan…Till now they have taken a backseat. But now it is time for them to emerge from the background and play a pivotal role in the engagement process — be it people to people or on the economic front," he added.

Mr. Hashwani was of the view that incidents like the one on the LoC should not be allowed by both the countries to hijack the peace process and goodwill. “It hurts the people on both sides. Senior citizens who wanted to cross over to India under the new liberal visa regime had to return back disappointed as India has put on hold the new visa policy. We have to look at such things closely and this is where the civil society has to play a big role. Time has come for both the nations to exploit their trade and human resources potential to the full.”

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