Transportation cost will be reduced by 2 billion dollars a year if India and Pakistan allow transportation of goods by road. This was stated in a report of Karachi Chamber of Commerce and Industry (KCCI) on trade with India. The report said that geographical proximity would reduce transportation cost by about 2 billion dollars.
The report said that although recorded trade between India and Pakistan is not more than 250 million dollars, but through third country and illegal channels it is more than 2 billion dollars. The actual potential of trade between the two countries is estimated in the vicinity of 10 to 15 billion dollars which, the report said, should be fully explored and expanded by adopting common approaches and joint strategies.
The report noted that in an era of globalisation, which contemplates liberalisation of trade also, the maxim of 'survival of fittest' would be the touchstone of trade promotion. As such, the days of captive market would no more return.
The report noted that the government of Pakistan must provide an enabling atmosphere to the industries for adhering to the principle of cost-effectiveness and quality and standard.
It admitted that the Indian industry enjoys supremacy in value-added goods, including engineering, auto-industry, cement, pharmaceutical, chemicals, software and other high-tech industries, whereas Pakistan's edge lies in certain categories of textile products, leather goods, fruits, vegetables etc.
The report said that free trade with India would also eliminate, or at least contain, the element of smuggling or trade through third countries.
The governments of both countries would, therefore, be beneficiary in terms of tax revenue, and the businessmen would be able to purchase low-cost goods at comparatively low freight rates and the consumers at large would benefit as a result of fierce competition, the report remarked.
The report recommended to the government of Pakistan to grant the 'Most Favoured Nation' (MFN) status to India.
The report recommended that possibilities of giving effect to Safta earlier than January 2006 be examined.