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Published Date: May 18, 2015

Understanding Non-tariff barriers between India and Pakistan

Executive Summary

India and Pakistan were highly dependent on each other for trade at the time of partition of Indian sub-continent in 1947. Thereafter, both the countries resorted to deliberate measures to minimize their trade dependence on each other due to Kashmir dispute. India’s share in Pakistan’s global imports went down from 50.6 per cent in 1948-49 to 2.7 per cent in 2005-06. However, operationalization of South Asian Free Trade Area (SAFTA) agreement in 2006 boosted the intra-trade ties between the two countries, and increased India’ share in Pakistan’s global imports to 4.3 per cent in 2013-14. India and Pakistan have preserved 614 and 936 sensitive items, respectively, for each other w.e.f. 1st Jan 2012. Further, Pakistan has the Negative List of 1209 items that cannot be imported from India w.e.f. 20 March 2012. During 2013-14, India was the 5th  largest exporter to Pakistan after China, UAE, Saudi Arabia and Kuwait. There are great potentials of mutual trade because of their geographical proximity, complementarity and competitiveness to each other. During 2013, the official trade between India and Pakistan could have increased from US$ 2.25 billion to US$ 30.4 billion (13.5 times), if both the countries had removed certain irritants in the way of trade.