Caravan in motion: Indo-Pak trade - II

The afternoon programme was visits to strong and effective trade associations. The first stop was at the Shangri-la Hotel where a jam-packed hall consisting of members of ASSOCHAM INDIA (The Associated Chambers of Commerce and Industry of India) welcomed the Minister and the delegation. Dilip Modi, the young and energetic President, in his Welcome Address expressed satisfaction at the momentum of confidence building measures undertaken by both the countries. He raised the issue of MFN and disclosed that he would be leading a delegation of ASSOCHAM members to Pakistan soon.
Ravi Wig, who was the President of PHD Chamber and who is actively involved in FICCI and is now the Chairman of SAARC Committee of ASSOCHAM was the person who had invited the delegation by calling me in Pakistan and was adamant that we accept their invitation. He is a great friend of Pakistan and wants to bring the businessmen of both the neighbours together. He started off his speech by stating that "if we want to talk among ourselves, in confidence, then we should talk in our own language." He added that "both the flags of India and Pakistan have green and white, so at least there is 67% similarity." He advocated joint ventures and exchange of lists of products that could easily be imported or exported among both the countries. Subash Aggarwal, a senior ASSOCHAM member then gave a short speech on the potential of trade and investment in the future.
The highlight of the interactive session was the presence of Arun Jaitley, the leader of the Opposition in Rajya Sabha and former Commerce and Industry Minister, who had shown exemplary courage and strong negotiation skills and had played a pivotal role at the WTO conference in Cancun in 2003. He gave the keynote address and it was a treat to listen to him. He said that "no country in the world produces or can produce every product and the search is always for availability at competitive rates. Trade is done all the time and we do it in the midst of many barriers." He called for "accelerated efforts by India and Pakistan to export the potential of trade and investment because at present the potential of trade and investment between both the countries cannot be realised due to certain factors." He said that "one of the strength of India is its large number of entrepreneurs and this has given an edge and the result has been over 8% growth in GDP." He complained that WTO is not functioning at the pace it should and that due to the inadequate movement of the WTO Doha Round, emphasis is now on regional or bilateral trade agreements. He proposed that developing countries should also concentrate on low-cost products and services because these are more in demand.
Jaitley also griped about the volume of indirect trade between the two countries and said that it is more than direct trade and adds to the cost and inefficiencies. He hoped that the land route for trade would soon commence once the infrastructure is in place and was of the view that it would be cost effective and would result in increased trade. He ended his speech by advising businessmen to "reform and be competitive and play the role of sheet anchor in ushering peace and prosperity in the region."
Amin Fahim in his impromptu remarks said, "Indians are very reciprocal to the views of the Pakistani delegation. We are taking one forward step while the Indians are taking two forward steps. This is a good augury. I would also mention that on the issue of common interests, all politicians are on the same page."
The meeting ended with vote of thanks by P. K. Jain and then a short meeting was held in an adjacent room between the Minister, Jaitley, and some of us over a cup of coffee.
The next stop was again at the Taj Palace Hotel where the members of Confederation of Indian Industry were waiting for us. We were escorted by Supriya Banerji, Deputy Director General with a smile and a Namaste.
In the absence of Director General Chandrajit Banerjee who was on an official trip to Japan, the co-chairman CII Agriculture Counsel Salil Singhal presented the welcome address. He dwelt at length on the wish list that would enhance bilateral trade. He mentioned, MFN, the negative list, the land route facility, the problems related to visas, communication, NTBs, etc and proposed that efforts must be initiated for a Free Trade Agreement like the India-Sri Lanka FTA. He advocated the need for "promoting confidence building measures especially through the effective use of media and that a platform be created for economic media to interact on a regular basis." He offered the services of Indians for sharing technical and managerial skills and developing the IT industry in Pakistan. He also offered the services of Indian experts in fields such as medical, agri-chemicals, and skill development. More importantly, he proposed the setting up of a Trade Facilitation Center at the Wagah border.
Commerce Secretary Zafar Mahmood began his comments by mentioning that "trade, investment, and economic co-operation between Pakistan and India have had a chequered history." He said that "Pakistani consignments to India are thoroughly checked and this is the prime reason why many Indian importers are reluctant to do trade with Pakistan." He appreciated the decision of India to support the EU initiatives for Pakistan that India had previously challenged in WTO. He informed the audience that "Pakistan is not a protective economy and even though we have a FTA with China, we have nothing to be afraid of."
Tariq Puri commented that "I am the most excited person in this whole exercise as events are moving in the right direction and I see a strong role for TDAP as a trade facilitator, supporter, and hand-holder for businessmen of both the countries."
Later, Makhdoom Amin Fahim performed the launching of the CII Study Report "India-Pakistan Partnering For Prosperity" which is an excellent study consisting of facts, figures, strategies, and pictures of various events related to Indo-Pak trade. I took the opportunity of requesting all those on the stage to autograph my copy of this Report.
An enthusiastic interaction then ensued with representatives from both sides taking keen interest and participating with their opinions. I commented on the need for a Pan-Asia approach with linkages between Saarc and Asean and the need for a common strategy for trade and investment with EU and North America. On my remarks on SME sector and the need to promote SMEs, Singhal informed us that out of 9300 CII members, over 6000 members are SMEs. Neesha Taneja, a well-known research specialist who has conducted a detailed study on Indo-Pak trade, said: "breaking the wall is easier while building it is a tedious process." Nazir Vaid and Khalil Sattar of K&N proposed the setting up of a food processing zone in Munabao as it would be of great help in getting food items from both the countries processed there. Vaid also called for sub-contracting software to Pakistan's IT firms. Zafar made a very arousing final comment. He said, "Yes, we will definitely do more."
At night, the Chief Minister of New Delhi, Sheila Dikshit, hosted a gala dinner at her residence. The cultural program was fabulously managed and the co-ordinator was a Sindhi lady whose family had migrated from Shikarpur, Sindh. I introduced her to Makhdoom Sahib and it was pleasing to the ears to hear Sindhi being spoken in New Delhi. The food was so excellent that every guest probably over ate. This, being the last official event, there were good-byes with the pledges of Phir Milainge.
Taking a break The Indian High Commission had given eight-cities, ten-days, non-police-reporting visa to the delegates. I took the opportunity to do some sightseeing in Delhi and then taking the train to see for myself what Emperor Shahjehan had done with state resources by building the Taj Mahal. It was a fabulous experience travelling by train to Agra. Kudos to national political leaders like Laloo Prasad Yadav, the erstwhile Railways Minister, who had provided leadership and vision with the result that today Indian Railways makes oodles of money and has huge monetary reserves while Pakistan Railways is ready to be scrapped and sent to the junkyard.
On Monday, October 03, Makhdoom Amin Fahim met the Indian Prime Minister Manmohan Singh where he was assured by the Indian leader that all obstacles to trade would be removed, India would honour the Indus Water Treaty, and that India desires a strong and stable Pakistan. The journey back home from New Delhi to Karachi by PIA was smooth and comfortable and the mood of the delegates was upbeat, because after all, the business community had smoked the first peace pipe.
Pragmatism desired in the roadmap The success of the delegation, the announcement of Foreign Minister Hina Rabbani Khar that MFN would be accorded to India, the flurry of activities at the Ministry of Commerce, and the feeling of anxiety among some sectors has led to a debate on the merits and challenges of granting MFN. The pharmaceutical industry led the opposition and their apprehensions were echoed by the automotive vendors, the farmers' representatives, and now the rice people have joined the chorus. Each sector and industry has its genuine complaints and is not comfortable with the composition of the negative list. However, now that the MFN would be granted and the negative list prepared and finalised, there is this imperative need to understand the dynamics of Indo-Pak bilateral trade scenario. What has been done and what must be done requires serious consideration.
Opening the routes Although there are four means of transportation of goods, there are still prescribed restrictions in the movement of such goods and products. Trade by air is one mode while movements by trains, by trucks, and by sea are more effective and competitive. However, even in this respect, there are barriers that impact on the freight cost, on timely delivery, and on the quantum of the goods that could be traded.
The Joint Statement appreciated the "significant progress made in developing physical infrastructure for trade through the Wagah-Attari land route." At the same time efforts would be made to increase the trading hours, fast-mode clearance of goods, and facilitating large vehicles and containerised traffic.
There is substantial demand for imported chrome ore by ferro-chrome plants based in the eastern provinces of India. Feedback received at various international conferences and seminars indicate a demand between 100,000 to 125,000 tons of chrome ore per annum. This is in spite of domestic mining as well as exports of chrome ore by India. The biggest deterrent in Pakistan's exports to India is the exorbitant freight cost by sea amounting to $22 to $25 per ton while the freight cost to China is around $5 per ton only.
There is a need to develop a mechanism under which both the countries can facilitate bilateral trade if the product or commodity is beneficial both to the supplier as well as to the buyer. This would encourage healthy competition and would enable businessmen to deal in products that would otherwise be not feasible.
(To be continued tomorrow)