Report

56 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
Table 7.3 Effect of 100% Tariff Cuts on Revenue: India
($ ‘000)
Partner Country Revenue Effect: Using Revenue Effect Revenue Effect India Imports
SMART Simulations (using simple average) (using weighted average)
Bangladesh–India –15,074 –38,910 –28,516 127,533
Nepal–India* –67,904 –13,208 –15,258 89,123
Bhutan–India* –8,795 –13,484 –10,044 89,123
Maldives–India –392 –275 –311 1,987
Pakistan–India –27,536 –30,755 –38,903 180,274
Sri Lanka–India* –2,265 –21,518 –3,132 579,993
Total effect –121,967 –118,150 –96,165
* Actual revenue loss may be much lower as India allows significant imports from these countries at zero duty
Table 7.4 Effect of 100% Tariff Cuts on Welfare
and Trade: India
($ ‘000)
Partner Country Welfare Effect Total Trade Effect
Nepal–India* 23,996 148,675
Bhutan–India* 3,247 17,490
Maldives–India 2,850 21,941
Pakistan–India 9,180 99,290
Sri Lanka–India* 13,858 162,261
Bangladeh–India 766,355 269,669
Total effect 819,486 719,326
Table 7.6 Effect of 100% Tariff Cuts on Welfare and
Trade: Pakistan
($ ‘000)
Partner Country Welfare Effect Total Trade Effect
Bangladesh–Pakistan 29,299 6,173
Bhutan–Pakistan 0 0
India–Pakistan 9,180 99,290
Maldives–Pakistan 33 192
Nepal–Pakistan 19 214
Sri Lanka–Pakistan 970 7,641
Total effect 39,502 113,510
* Actual trade creation may be much lower as India allows
significant imports from these countries at zero duty
Table 7.5 Effect of 100% Tariff Cuts on Revenue: Pakistan
($ ‘000)
Partner Country Revenue Effect: Using Revenue Effect Revenue Effect Pakistan Imports
SMART Simulations (using simple average) (using weighted average)
Bangladesh–Pakistan –1,273 –9,948 –3,756 55,886
Bhutan–Pakistan 0 –105 –69 572
India–Pakistan –49,483 –67,474 –43,656 576,701
Maldives–Pakistan –35 –488 –845 3,421
Nepal–Pakistan –219 –574 –330 4,023
Sri Lanka–Pakistan –4,725 –7,332 –3,705 70,973
Total effect –55,735 –85,921 –52,360
Impact on Pakistan
Tables 7.5 and 7.6 indicate bilateral revenue, welfare
and trade effects in case India cuts tariff by 100% for
SAFTA member countries
• Revenue losses to Pakistan are about $0.055 billion
on the basis of SMART simulation while it is $0.085
and 0.052 billion on the basis of simple and
weighted average tariff (Table 7.5).
• There are welfare gains for Pakistan and other
SAARC countries from the 100% tariff reduction
by Pakistan. Welfare gains for all seven countries
amounts to be $39 million and maximum welfare
gains are due to India and Pakistan (Table 7.5).
• 100% tariff reduction by Pakistan creates trade
approximately $0.11 billion (Table 7.6).
Impact on Sri Lanka
Tables 7.7 and 7.8 indicate bilateral revenue, welfare
and trade effects in case Sri Lanka cuts tariff by 100%
for SAFTA economies.
• Revenue losses to Sri Lanka are about $0.1 billion