India’s latest business delegation to Pakistan includes executives from its leading wireless company and its largest domestic airline, as the nuclear-armed rivals seek to trade their way to closer relations.
Commerce Minister Anand Sharma is in Pakistan with more than 120 company officials in what India’s government says is the most substantive bilateral trade mission since both countries won independence from British colonial rule in 1947. Sharma will hold talks on Feb. 15 with his Pakistani counterpart Makhdoom Amin Fahim in Islamabad to review the progress in normalizing trade relations.
“This is a major step towards deepening economic engagement between India and Pakistan,” Sharma said at a press conference in New Delhi Feb. 12 before leaving for Pakistan. “We will discuss all aspects of economic engagement and it is our hope that by taking economic relations to a higher level we will be creating an environment of trust and confidence.”
India aims by 2015 to double commerce with its neighbor from $2.7 billion in the fiscal year that ended March 31. Pakistan in November granted India Most Favored Nation status, its biggest step to facilitate cross-border trade since peace talks stalled by the 2008 Mumbai attack resumed last year.
Among those traveling with Sharma during the three-day, three-city visit are Naresh Goyal, chairman of Jet Airways India Ltd., and Rajan Bharti Mittal, managing director at Bharti Enterprises Ltd., which partners Wal-Mart Stores Inc. in India, according to the Federation of Indian Chambers of Commerce and Industry.
Sunil Kant Munjal, whose family controls Hero Motocorp Ltd., India’s biggest motorcycle company, is also part of the delegation, the Confederation of Indian Industry said in a separate statement in New Delhi.
“This is probably the largest ever trade delegation India has sent to Pakistan,” said Dipankar Banerjee, an analyst at the New Delhi-based Institute of Peace and Conflict Studies. While the trip will foster better relations, trade between the two nations won’t reach its potential “unless there is a major boost in infrastructure construction and removal of non-tariff barriers,” Banerjee said.
India’s government Feb. 7 predicted gross domestic product will rise 6.9 percent in the 12 months through March from a year earlier, the least since 2009 as the global recovery falters. The $1.7 trillion economy, Asia’s third largest, also faces pressure from budget and trade deficits, and policy gridlock inhibiting investment.
Pakistan’s $175 billion economy grew 2.4 percent in the year through June 2011, one of the smallest expansions in a decade, as floods, militant attacks and rolling power blackouts fueled price rises, drove out investment and closed factories.
An $11.3 billion International Monetary Fund loan to Pakistan expired in September, with disbursements suspended in May 2010 after the country failed to meet conditions attached to it. The lender forecasts Pakistan’s GDP will rise 3.4 percent in this fiscal year.
The nuclear-armed rivals, which have fought three wars, agreed last year to broaden the number of goods that can be traded between the two countries and to grant more business visas as they move toward normalizing economic ties. They vowed to dismantle tariffs on about 8,000 items by the end of this year, with all restrictions being lifted by 2013.
The display of Indian interest in boosting economic ties is a “good sign,” said Khalid Tawab, vice president of the Federation of Pakistan Chambers of Commerce & Industry. The volume of trade that is routed through third countries should fall, Tawab said.
In Lahore, the Indian delegation attended a trade fair where 400 Indian manufacturers are showcasing products ranging from jewelry and cosmetics to auto parts.
Wide-ranging negotiations to improve relations resumed in February, after a more than two-year break following the terrorist attack on Mumbai by 10 Pakistani militants. India says it’s continuing to press Pakistan to dismantle guerrilla groups based on its soil and targeting India.
Trade between India and Pakistan has been hampered by six decades of distrust and hostility since the two nations gained independence. The countries have twice gone to war over their conflicting claims to the territory of Kashmir.
The two countries agreed in July to expand trade and travel between the parts of Kashmir they control.
Sharma said he expects Pakistan to remove most barriers to trade. Pakistan currently allows imports of nearly 2,000 items, including cotton, sugar and textiles. Restrictions remain on goods such as pharmaceuticals and jewelry.
“Barriers to investment are particularly high due to restrictive visa regimes and difficult clearances,” the CII said. “This results in the inability of industry on both sides to leverage each other’s financial, technological and managerial resources.”