Pakistan-India Trade:

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What Can India and Pakistan Do To Maximize the Benefits from Trade? Table 2: impediments to india-Pakistan Trade Tariff barriers Non-tariff barriers Finance measures Quality control measures Technical barriers to trade Sources: Taneja 2012 and Khan 2011. Customs duties Special additional duties Countervailing duties Stringent visa regimes Trade-distorting subsidies Overland transportation limitation Air travel restrictions Sea transportation restrictions Transit restrictions Port of call restrictions Cumbersome payment systems Restrictive official foreign exchange allocations* Regulations concerning terms of trade for import payments** Non-acceptance of letters of credit High commission of foreign banks offering letters of credit Lack of bank branches License with no specific ex-ante criteria *** License for selected importers Sanitary and phytosanitary measures Marking requirements Labeling requirements Testing, inspection, and quarantine requirements Pre-shipment inspection/certificate acquisition *Indian firms and individuals are subject to capital account restrictions. **If imports of physical capital exceed $15,000, an international bank must cover the advance remittance through a bank guarantee. ***A special import license is required to import certain goods. | 111 |
Kalpana Kochhar and Ejaz Ghani and availability of trade-related infrastructure, especially roads, still constrains logistics performance. The quality of logistics services—trucking, forwarding, and customs brokerage— is also central to trade efficiency. Logistics performance is strongly associated with the reliability of supply chains and the predictability of service delivery. The picture on the ease of doing business and trading across borders, particularly for intra-regional trade, is not impressive for most South Asian countries. Among the major causes of high trade transaction costs are numerous cumbersome and complex cross-border trading practices, which also increase the possibility of corruption. Goods carried by road are subject to transshipment and manual checking at the border, which impose serious impediments to trade. This is further compounded by a lack of harmonization of technical standards. The CGE simulations show that improved trade facilitation could increase the volume of trade between India and Pakistan by reducing the transaction costs of trade, and thereby making exports more competitive and imports less expensive. To support trade flows between the two countries, India’s Integrated Check Post at Attari-Wagah border, inaugurated on April 13, 2012, is a welcome step forward. With regard to physical infrastructure, the Wagah border-control facilities must be greatly expanded. Specifically, sophisticated X-ray machines through which trucks can pass quickly should be a top priority; warehousing is needed at Attari; and several new train stations need to be built. Recommendation 2: Investment Globalization has created immense opportunities for countries to catch up and grow. It allows countries to benefit from scale and specialization, and from the knowledge and technologies that have been developed anywhere in the world, whether embodied in machinery, intermediates, or inflows of foreign direct investment (FDI). World trade has experienced a boom in the last decade, driven by technological changes that have lowered the costs of communication and transport. The resulting globalization of production, with its associated value supply chains, has lowered prices and increased the variety of imported goods and services for firms and consumers. It has also led to unprecedented inter-linkages and inter-dependency among countries. | 112 |
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Moving Toward Pakistan-India Trade
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Pakistan’s Trade with India: Thin
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Perspectives from India | 53 | ARVI
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