Pakistan-India Trade:

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Additional Trade Challenges: Transport, Transit, and Non-Tariff Barriers other instead of from elsewhere in the world. In order to identify these items and assess the magnitude of trade possibilities (referred to as trade potential) between the two countries, in late 2011 the author calculated an estimate of potential bilateral trade. Products having trade potential were identified as those with (a) adequate demand in the receiving country and (b) adequate supply capabilities in the source country. The exercise was conducted by posing Pakistan as a supplier to assess its possibilities to India, and then by posing India as the supplier country. The results of the exercise show the existence of an estimated bilateral trade potential of $25.2 billion in 2010, which is 10 times larger than the current $2.5 billion trade (Taneja and Kalita 2011). India has an untapped export potential of $21.1 billion, of which $7.2 billion can be accounted for by petroleum products alone. Exports of petroleum products by India to Pakistan can increase manifold with Pakistan’s granting of MFN status to India. Compared to Bangladesh, Sri Lanka, and Nepal, India’s exports to Pakistan in this sector are quite low. In 2010, India’s petroleum oil and products exports to Nepal were the highest at $627.8 million, followed by Sri Lanka at $598 million, and Bangladesh at $110.1 million. The 10 largest items having export potential from India to Pakistan accounted for 45.5 percent of total export potential. Cotton and organic chemicals like para-xylene, which are already major export commodities to Pakistan, are shown to have additional potential for exports of $459.8 million and $230 million, respectively. Other items in the top 10 products having export potential include light petroleum oils & preparations, motor vehicles, telephones, and tea (see Table 2). Pakistan’s export potential to India in 2010 was $4.1 billion, of which $1 billion was petroleum products. The value of the 10 largest items with export potential from Pakistan to India was $2 billion, which accounted for 49 percent of total export potential. Dates have an additional export potential of $52.3 million. The top 10 products having export potential include petroleum oils, cotton, jewelry, and electric generating sets (see Table 2). It is to be noted that India and Pakistan have an export potential in petroleum oils. However, at a disaggregated level, Pakistan’s major petroleum oil export is base oil, while India’s comparative advantage within petroleum oil lies in high speed diesel, aviation turbine fuel, fuel oil, and lubricating oil. | 79 |
Nisha Taneja TaBle 2: Trade PoTenTial ($ Millions) Product Code Product description india’s exports to the World | 80 | Pakistan’s imports from the World india’s exports to Pakistan india’s Trade Potential 271019 Petroleum oils and oils obtained from bituminous minerals, other than crude Light petroleum 21029.6 6551.9 1.0 6551.0 271011 oils & preparations 15071.7 686.4 25.5 660.9 520100 Cotton, not carded/combed 2973.0 760.2 300.3 459.8 851712 Telephones for cellular networks 1481.9 425.4 0.0 425.4 390210 Polypropylene, in primary forms 800.0 329.1 20.6 308.5 870322 Motor Vehicles 2151.8 285.8 0.0 285.8 090240 Tea, black (fermented) 570.7 298.5 22.5 276.0 290243 p-Xylene Drilling 426.4 353.6 123.6 230.0 890520 platforms for light vessels, dredgers, etc. Flat-rolled 1072.9 200.4 0.0 200.4 721049 products of iron/ non-alloy 662.5 199.5 0.3 199.2
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