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Extend Kashmir initiative to Pakistan, Bangladesh

Business Standard, India

Extend Kashmir initiative to Pakistan, Bangladesh

By Tnc Rajagopalan / New Delhi

27 October 2008

For the first time in 60 years, 30 trucks rolled across the Line of Control in Kashmir on Tuesday, carrying mostly fruit and vegetables. It is a small beginning but a very significant one. More trucks will run regularly on routes between Srinagar and Muzafarrabad and between Poonch and Rawalakote.

The Kashmir initiative should be extended to Bangladesh and Pakistan. The countries in the sub-continent have not exploited their full potential for trade with each other due to unnecessary obstacles to movement of cargo. Our exports to Pakistan are barely 1.19 per cent of our total exports and imports barely 0.11 per cent of total imports.

Our exports to Bangladesh is barely 1.79 per cent of our total exports and imports barely 0.10 per cent of our total imports. No doubt, the SAFTA (South Asian Free Trade Agreement) paves way for the eventual abolition of import duty on most items. Yet, that is not enough. Logistics and ease of doing business are very important.

Currently, the Indian cargo bound for Bangladesh is unloaded at the border and then re-loaded on to trucks of Bangladesh. Why can arrangements not be worked out for trucks carrying cargo from India to go to various destinations in Bangladesh straightaway, with reciprocal facility extended to trucks from Bangladesh? A simple workable arrangement to let the trucks have free passage will help the transporters get cargo both ways and eliminate unnecessary transaction costs.

SAFTA focuses on phasing out tariffs among South Asian countries by 2015. But, preferences will erode with general lowering of tariffs either through multilateral trade agreements or unilateral measures. The time to let businesses in India, Pakistan and Bangladesh establish their products in neighbouring markets is before the preferences get eroded. For that, the logistics barriers also must be dismantled.