We may take advantage from the trade liberalisation policies of India. To compete with India it may not be considered a problem but an opportunity. We have to make our industry efficient and competitive.
Pakistan's trade and industry must focus on the core areas of competence and competitiveness. Pakistan should utilise from the potential areas in which India has a comparative advantage due to low utility rates, cheap labour and subsidies.
India has abundance of iron ore reserves and other raw materials, which have given a competitive edge to Indian industries.
The specific sectors in which India has comparative advantage are software and IT services, automobiles, industrial robots, steel, textiles, gems and jewellery, and mechanised agriculture. Similarly the Indian presence in potential sectors for investment in Pakistan should be welcomed.
These specific sectors include oil and gas, power, telecommunications, aviation, railways, roads (highways, motorways), insurance, banking, finance, petrochemicals, surgical instruments, leather and leather products, bicycles, electrical appliances (fans), tea processing, fertiliser, livestock and dairy, fisheries, fruits and vegetables.
The exports to India include vegetables and fruits, textile yarn and fabrics, plants for perfume, pharmaceuticals, rice, leather, petroleum crude, sugar, cane refined.
The items of import from India include organic chemicals, oil-cake residue of soyabeans, sugar, iron ore, iron and steel, dying, tanning materials, tea, transport vehicles and equipment's, bidi leaves, and betel leaves etc.
Pakistan's balance of trade with India remained favourable in 1998-99 due to sugar exports, but thereafter it could not be positive.
There are good prospects for mutual services and co-operation in the chamber of commerce and industry of both the countries.
The economic relations of India-Pakistan can be improved under the platform of SAARC. Under this platform, India and Pakistan have agreed to maximise harmonisation, simplification and uniform application of trade operations. Compared to other regional organisations - NAFTA, EU and ASEAN - the SAARC is moving very slowly.
Various trade and industry related agreements were signed during the visits of official and trade delegations. All efforts may lead to an economic marriage between Pakistan and India.
There are positive as well as negative impacts of trade liberalisation between Pakistan and India. In India, there is low-cost energy, low-interest rates, flexible taxes, low wages, government subsidies and the big size of economy.
On the other hand, the cost of production in Pakistan is higher because of high power rates, high interest rates, high corporate income tax, high wages and varied hidden production costs.
Some Indian industries are highly protected and subsidised, which is also a matter of concern for local industries. If Pakistan opens up trade with India, there are many areas, like pharmaceuticals, automobiles and the light engineering industry of Pakistan that would be rendered uncompetitive due to subsidies available to the Indian industry.
It is hoped the trade liberalisation will have a positive impact on socio-economic relationship between India and Pakistan through tourism, academic and cultural exchanges. Due to shorter distance, it will be better and cheaper for Pakistan to import machinery from India with less freight. We should import only those items, which the Pakistani industry is not producing. It is recommended that we have to go about developing Pakistan-India regional economic bloc on the same basis as other developed countries.
With the start of Iran-Pakistan-India gas pipeline project the three countries would benefit. The Turkmenistan gas pipeline project is feasible and viable in economic terms. New Delhi's inclusion would make it more attractive and market oriented. There is a dire need of improving our capabilities through research and development.
For this challenge the business community should be ready to undertake a market survey to chalk out the areas in which investment will give fruitful results in the long run.
Both countries should welcome trade delegations cordially. Women of the two countries should also be willing to have bilateral trade.
The Pakistan-India women entrepreneurs can play an important role in boosting the socio-economic status of women in South Asia. Besides women, students and the younger generation can play an important role in nourishing and developing trade and industry between Pakistan and India.
The key to successful interaction between the two countries is a series of one-to-one meeting.
Though Pakistan enjoys the Most Favoured Nation (MFN) status in trade and commerce from India, Pakistan is yet to reciprocate the gesture.
Our exporters cry that due to the difference between the bank rate and market rate they get less amount in export proceeds, whereas in India, there is only one rate. The government should solve this genuine problem.
The huge defence burden has left the economies of both countries in tatters. Both Pakistan and India should decrease their arms and defence expenditure in order to create peace, prosperity and economic welfare of the people of the neighbouring nations, because stability in the region is a prerequisite for economic development of both countries.
If economic relations between Pakistan and India goes according to plan, both the governments would not only be able to make their countries economically viable but would also be able to reduce poverty and enhance the living standard of the common man.
RECOMMENDATIONS:
1. The economies of Pakistan and India can indeed benefit from trade liberalisation policies through exchange of technology and specialisation.
2. Before establishing Pakistan-India trade, the government of Pakistan should lower the utility rates and subsidies to local manufacturers of automobiles.
3. The government of Pakistan should provide more subsidies to the power sector before taking steps for liberalising trade with India. Moreover, anti-dumping duties should be imposed to protect local industry.
4. Women of the both countries should be willing to have bilateral trade. The Pakistan-India women entrepreneurs can play an important role in boosting the socio--economic status of women in South Asia.
5. Students and young businesspersons should share knowledge, education, sports, fashion, communication, banking, art and culture, science and technology. The long-run impact of these efforts will be significant as the students will be leaders in various walks of life in India and Pakistan.
6. Our exporters complain that due to difference between bank rate and market rate they get less amount in export proceeds, whereas in India, there is one-rate ie current account. The government should solve this genuine problem.
7. Though Pakistan enjoys the Most Favoured Nation (MFN) status in trade and commerce from India, Pakistan is yet to reciprocate the gesture.
8. Besides new developments in socio-economic scenario, both countries should also share trade and industry related information.
9. India's economic policies are designed to attract significant capital inflows into its potential sectors. The Pakistani firms should utilise this opportunity. Similarly in potential sectors of Pakistan, the Indian presence should be welcomed.
10. The recent efforts being made at re-establishing diplomatic relations, restoring travel links, encouraging trade and diffusing the tension between the two neighbours should materialise into diplomatic policies, which will also revamp trade and industry of both nations.
11. With the start of Iran-Pakistan-India gas pipeline project the three countries would benefit. Like this project, feasibility reports should be prepared for future projects in which Pakistan and India along with other neighbouring countries would benefit.
12. The Turkmenistan gas pipeline project is feasible and viable in economic terms. New Delhi's inclusion would make more attractive and market oriented.
13. There is a dire need of improving our capabilities through research and development. For this challenge the business community should be ready to undertake market survey to chalk out the areas in which investment will give fruitful results in the long run.
14. Both countries should facilitate the visit of trade delegations to enable businessmen to understand the strengths, weaknesses, opportunities and threats of their competitors, which is a pre-requisite for successful negotiations.
15. Both Pakistan and India should decrease their arms and defence expenditure in order to create peace, prosperity and economic welfare of the people.
16. If war is not an option then the option left is peace. If USA and Russia, despite having long conflicts in social, political and economic fields could co-operate, why cannot Pakistan and India? If the European nations, having a past full of tensions and conflicts can emerge as a powerful economic bloc European Union, why cannot we go about establishing Pakistan-India regional economic bloc (P.I.R.E.B) on the same line? India and Pakistan have a major responsibility for making SAARC effective by promoting trade and commerce within member states.
17. Both are nuclear powers, both can be economic powers as well. If both get married economically they can resist other regional economies thundering and can easily meet the challenges of WTO. There is a dire need to plan, implement and monitor the economic marriage between Pakistan and India.