Pakistani traders are hoping for early stabilisation of ties with India so that trade and economic links between the two nations can be revived.
Lauding the peace initiative taken by Indian Prime Minister Atal Bihari Vajpayee, Pakistani economist Haris Gazdar told rediff.com in Bangalore on Wednesday the people in his country were hopeful that a solution to the Kashmir problem would be found soon as there was international pressure on both the nations to normalise their relations.
"Though we are upbeat about the ongoing peace process, we are cautious about an early outcome in the backdrop of similar efforts in the past not yielding positive results," he said.
"Nevertheless, in the changing geo-political scenario, especially in the aftermath of the recent Iraq war and the 9/11 attacks, it is high time India and Pakistan resolve all their outstanding issues so as to pave way for boosting our trade and economic relations," Gazdar stated.
Highlighting the advantages of two-way trade between the two countries, Gazdar said that the potential gains were enormous as businesses and industries would benefit by exporting or importing their goods or products directly.
"Instead of trading indirectly through a third country or by smuggling goods, it will be a win-win situation for both the countries if exports and imports are routed through the borders," he claimed.
"Such an approach will not only enhance trade by reducing the delivery cycles, but also bring down the overheads, including transportation and the cost of servicing the goods," Gazdar said.
Asked whether restoration of normal ties would lead to Pakistan granting the most-favored nation (MFN) status to India, Gazdar said that the decision was not merely economic in nature, but a politically sensitive one, as Pakistan would have to factor in the pros and cons of such a decision.
"In the entire South Asian region, it is an established fact that India is a big country and bigger than all the SAARC countries put together in terms of geography and economy. If the MFN status is to be granted, Pakistan has to weigh both the advantages and disadvantages of such a decision as we will not be able to match India on exports or imports," Gazdar said.
While both the countries have their own strengths in agricultural commodities and industrial products, especially in textiles and cash crops, India will have to be competitive in Pakistan in electronic and consumer items as it will face the heat of competition from Chinese or Taiwanese goods which are much cheaper.
"Indian manufacturers will have an advantage to ship their capital goods to Pakistan industry as they can be cost-effective vis-à-vis such imports being currently made from the South East Asian region."
"On the other hand, Pakistan's electronics goods and consumer durables such as fans, motors and other items of everyday use are cheaper than their Indian counterparts because of low manufacturing cost and lower tariffs," said Gazdar.
Pakistan being an open economy, Indian products will certainly face competition from its own industries and the Chinese goods, which have made inroads in our economy," Gazdar pointed out.
Gazdar is in Bangalore to participate in the ongoing three-day World Bank Annual Conference on Development Economics, along with three other Pakistani delegates.
Gazdar is the director of the Karachi-based Collective for Social Science Research Ltd.
The Pakistan delegates also had a word of appreciation on the rapid strides Indian economy has been making even in the face of global downturn.
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