Normal Indo-Pak trade can end indirect commerce: experts

With Pakistan promising to completely normalise trade with India, the third-country exports of Indian goods to the neighbouring country would drastically come down, experts said.

"Strong possibilities have emerged that third country trade, estimated at $10 billion, will come down drastically within two years and would be eliminated by by 2015," SMC Global Securities CMD Subhash Chand Aggarwal said.

Pakistan has agreed to open its market for over 7,000 items from India in the next three months. At present, Pakistan allows import of only 1946 items based on positive list.

From February, 2012, Pakistan would shift to the negative list of few items, which it would not import. By the end of 2012, it has agreed that the negative list itself should be removed. This would virtually mean grant of the crucial Most Favoured Nation (MFN) status to India.

Crisil's Chief Economist DK Joshi said the two neighbours need to increase their bilateral trade.

"It is important for us to resume trade. We are physically close and direct trade will not only reduce the cost, but also would benefit both," he said.

Once Pakistan widens the market access, India's exports to the neighbouring country would immediately leapfrog to $7.5 billion, experts said.

This is because the third-country shipments being routed through Dubai would be directly shipped to Pakistan. The two-way trade is a paltry $2.65 billion.

India had conferred MFN status to Pakistan in 1998.