The thaw in relations between India and Pakistan has paved way for unleashing major ‘confidence building' initiatives on various fronts, including trade, banking, foreign direct investment and easing of visa restrictions in the next few months, which can take the economic and political engagement to a new level.
Seeking to consolidate the gains of bilateral visits and meetings between Prime Minister Manmohan Singh and Pakistan Prime Minister Yusaf Raza Gilani and subsequent exchanges between the commerce ministers of the two countries, a major working agenda has been lined up in the next few months that could change the way the two countries now deal with each other.
As a follow up of the visit of Commerce Minister Anand Sharma, the Expert Group on Electricity of the two countries will now meet in Lahore next month to finalise the modalities of electricity trade between the two neighbours. The first meeting of this group was held in October last in New Delhi. Similarly, the first meeting of the Expert Group on Trade in petroleum products would be held in the first week of March in New Delhi.
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On the issue of opening of bank branches of both countries, the Central Bank of Pakistan and the Reserve Bank of India will meet on March 10 in Mumbai to work out the details. Similarly, the Joint Working Group of Minister of Interior Pakistan and the Ministry of Home Affairs is finalising details for a new visa agreement that could facilitate the movement of businessmen and ease restrictions on movement of common man on both sides. The Commerce Ministry has already asked the Finance and Home Ministries to consider allowing foreign direct investment (FDI) from Pakistan on a par with the guidelines that govern FDI for Bangladesh.
It has also been decided that when Pakistan notifies its negative list, discussions will be launched on reducing the size of the sensitive list and drawing up a programme for tariff liberalisation on such items. Tariff liberalisation for up to 30 per cent of the sensitive list will be considered by India within four months of the notification of the pruned negative list by Pakistan. It has been decided that when the transition of MFN (Most Favoured Nation) is effected, all items, other than those in the SAFTA sensitive list, will get preferential access at a peak tariff level of 5 per cent by the end of 2012.
On the issue of opening of the Munabao/Khokharapar route for trade, a Joint Working Group would be constituted, which will report to the respective governments before the next round of talks between the commerce secretaries of the two countries. This would be done in consultation with the stakeholders on the respective sides. Interestingly, the regulators from India and Pakistan have already held consultations with leading chambers of each other countries in the last few months to deliberate on trade regulations, standards and labelling requirements.
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