Lately World Bank has released a report that states two neighboring India and Pakistan are losing trade potential of about $37 billion due to political tensions and lack of normal business relations.
The report is titled as “A Glass Half Full: The Promise of Regional Trade in South Asia” and it adds that lack of trade relations affects formation or deepening of regional value-chains.
It highlights key factors like both the countries have not given tariff concessions on sensitive lists of items.
Pakistan has a list of 936 items while India has 25 items. The former has 17.9 percent of tariff lines applied to imports from all South Asian Free Trade Area (SAFTA) countries while the later has just 0.5 percent of tariff lines.
The popular Attari-Wagah border is opened for just 138 items from India to Pakistan, but with the restrictions that cargo trucks cannot move beyond the border zones on either side. This means the goods are thereafter unloaded and reloaded to domestic trucks. it adds to the cost of trading.
More to this, human mobility between India and Pakistan is restricted to the highest level. This is one another reason why trade potential is not fulfilled by the two neighbors.
Apart from all these, there have been continuous political tensions between India and Pakistan, contributing to the lack of progress in South Asia.
