India, Pakistan to start discussions on import duty cut Close.

NEW DELHI: India and Pakistan will soon begin discussions on a preferential trading arrangement to lower import duties on an array of goods. The talks will be held under the ambit of Safta, the free trade agreement signed eight years ago between member-states of South Asian Association for Regional Cooperation, a senior Indian official said.

"Our commerce ministers had agreed earlier this year that when Pakistan notifies its negative list (for trade with India), we will start discussions on reducing the sensitive lists under Safta," the official told ET on condition of anonymity.

"Since Pakistan has already delivered its side of the bargain, the preferential trading discussions would begin soon." India has not given significant benefits to Pakistan under Safta, which mandates members to bring down tariffs by up to 5%, as its neighbour continued to ban import of most Indian products. It has not provided any preferential access to as many as 865 items from Pakistan included in a sensitive list. For least developed countries, the sensitive list consists about 25 items, while for Sri Lanka it has around 400.

"India's sensitive list for Pakistan includes almost all items of interest to the country like textiles, surgical instruments and farm products," a Pakistani official told ET. "The Safta, therefore, does not offer Pakistani business any significant access to Indian markets."

Since Pakistan allowed just 1,967 items from India and banned more than 4,000 products, it automatically did not have to extend tariff preferences to the country under Safta.

India had promised that it would consider lowering tariffs for Pakistan on about 30% of items in the sensitive list within four months of implementation of the negative list, the official said. "We have to start work on that now so that further liberalisation of trade under Safta for both countries can take place once Pakistan allows free flow of imports from India by dismantling the negative list by the year-end," the Indian official added.

Last week, Pakistan decided to end its discriminatory trade regime with India by giving up its positive list of imports for the country in favour of a negative list, which allows imports of all products except those included in the list.

This would lead to an almost three-fold increase in India's exportable items immediately and by the end of the year, when the negative list is phased out, all 7,000 items will be allowed.

"This should logically mean that more products from India would not only get access to the Pakistani markets but would get it at preferential terms under the Safta. The details have to be discussed with the Pakistani side now," the official said.

Trade experts feel that both sides could benefit from Safta with the dismantling of barriers. "There is a scope for India to bring down its sensitive list for Pakistan to about 57 items under Safta. It could be brought down further, depending upon the response from the other country, if India is ready to exclude all textile items from the list," said Nisha Taneja, professor at Icrier, a Delhi-based economic think tank. India exported goods worth $2.33 billion to Pakistan last year, while imports from there stood at $330 million.

Source : economictimes.indiatimes.com