As the new year begins, I hope India and Pakistan take meaningful steps towards normalising political relationship and enhancing economic cooperation. India can consider taking the lead by allowing duty-free import of Pakistan-origin goods without insisting on reciprocal steps from the other side.
For decades, periodic political tensions have derailed attempts to improve economic ties between the two countries. India-Pakistan trade is about $2 billion a year, with India running a huge trade surplus with Pakistan. Informal trade via Dubai is estimated at $5 billion. Breaking down the trade barriers can increase the official trade to $25 billion or more and create a vested interest for peace in both the countries.
Of late, the prime ministers of both the countries have talked of the need to resolve all issues amicably. Reasonable sections of the society appreciate that economic cooperation rather than confrontation will bring more benefit to people on both sides of the borders. They get shouted down by the belligerent sections, but that need not deter the leaders from taking pragmatic measures to bring about improvements in trade-related infrastructure, enhancing transport connectivity, customs facilitation, specialised trade fairs and increasing people-to-people connectivity by easing the visa regime, improving telecommunication links, information sharing, etc. Most of these measures need not cause much heartburn on either side.
India and Pakistan can open more land routes for bilateral trade; increase the number of items allowed through the land routes; agree on norms to facilitate movement of trucks through the other's territory; establish more rail links; undertake trade facilitation measures with suitable risk management; create testing and allied facilities at the border posts; streamline border procedures; encourage simplification of documents, automated processes, and enhanced information availability; specify benchmarks to guide implementation of trade-related standards; and adopt processes for developing, monitoring, and reviewing. They can also increase transparency to enable clarity of the policies that are currently quite complicated, address the information asymmetry, and reduce non-tariff barriers.
The two countries can facilitate trade in energy, information technology, and services. They can remove prohibition on international roaming in each other's country networks, decrease terminal charges for international incoming calls, bring in reforms in the processes of electronic transactions, and connect both countries with several fiber optic at border crossings. Both countries can agree to introduce South Asian Association for Regional Cooperation (Saarc) business card, as suggested by Prime Minister Narendra Modi at the Saarc summit at Nepal; allow non-police reporting and issue non-city specific visa to businessmen who have been certified by the Chamber of Commerce without any criteria of income or turnover; introduce more categories of visas for students, artists, and skilled workers; and simplify procedures for applying and obtaining visas. More direct flights to more destinations in both the countries can be allowed. These measures will help considerably, but the most impactful step would be to grant duty-free access to Pakistan-origin goods. That will make more people in both countries dependent on activities related to such imports into India. In their self-interest, they will advocate for peaceful relations and, thus, act as pressure groups demanding resolution of larger political issues. Already, India has granted the 'most favoured nation' treatment to Pakistan, although Pakistan has not done so. So, extending non-reciprocal duty concessions would only be the logical next step.
