Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead...

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION June, 2015

Transcript of Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead...

Page 1: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION:A WORD OF CAUTION

June, 2015

Page 2: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions
Page 3: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION:

A WORD OF CAUTION

June 2015

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Acknowledgements:

Team Leader: Samir S. AmirLead Researcher: Syed Danish Hyder

Disclaimer: The findings, interpretations and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Directors and Members of the Pakistan Business Council or the companies they represent. Any conclusions of analysis based on ITC, IDB, CTS, UNCTSD and WEO data are the responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN.

Although every effort has been made to cross-check and verify the authenticity of the data, the Pakistan Business Council does not guarantee the data included in this work. All data and statistics used are correct as of 1st June, 2015, and may be subject to change.

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The Pakistan Business Council: An OverviewThe Pakistan Business Council (PBC) is a business policy advocacy forum, representing private-sector businesses that have substantial investments in Pakistan’s economy. It was formed in 2005 by 14 (now 47) of Pakistan’s largest enterprises, including multinationals, to allow businesses to meaningfully interact with government and other stakeholders.

The Pakistan Business Council is a pan-industry advocacy group. It is not a trade body nor does it advocate for any specific business sector. Rather, its key advocacy thrust is on easing barriers to allow Pakistani businesses to compete in regional and global arenas.

The PBC works closely with the relevant government departments, ministries, regulators and institutions, as well as other stakeholders including professional bodies, to develop consensus on major issues which impact the conduct of business in and from Pakistan. The PBC has submitted key position papers and recommendations to the government on legislation and other government policies affecting businesses. It also serves on various taskforces and committees of the Government of Pakistan as well as those of the State Bank, SECP and other regulators with the objective to provide policy assistance on new initiatives and reforms.

The PBC conducts research and holds conferences and seminars to facilitate the flow of relevant information to all stakeholders in order to help create an informed view on the major issues faced by Pakistan.

The PBC’s Founding Objectives:

• To provide for the formation and exchange of views on any question connected with the conduct of businesses in and from Pakistan.

• To conduct, organize, set up, administer and manage campaigns, surveys, focus groups, workshops, seminars and field works for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan.

• To acquire, collect, compile, analyze, publish and provide statistics, data analysis and other information relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan.

• To promote and facilitate the integration of businesses in Pakistan into the world economy and to encourage the development and growth of Pakistani multinationals.

• To interact with Governments in the economic development of Pakistan and to facilitate, foster and further the economic, social and human resource development of Pakistan.

The PBC is a Section 42 not-for-profit Company Limited by Guarantee. Its working is overseen by a Board of Directors elected every three years by the Membership with the Board being headed by a Non-Executive Chairman. The day-to-day operations of the PBC are run by a professional secretariat headed by a full-time, paid CEO.

More information on the PBC, its members, and its workings, can be found on its website: www.pbc.org.pk

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The PBC’s Member Companies

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The PBC’s Member Companies

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TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................................................. ixKEY FINDINGS .................................................................................................................. ix

FEASIBLITY OF GRANTING INDIA NDMA STATUS .................................................................x

RECOMMENDATIONS ...................................................................................................... xiii

ANALYSIS OF HIGH POTENTIAL TRADE ITEMS ................................................................... xiv

CONCLUSION ................................................................................................................ xxii

1.0 STUDY OBJECTIVES ..................................................................................................01

2.0 BACKGROUND TO STUDY ........................................................................................ 05

SECTION I: FEASIBILITY OF GRANTING NDMA TO INDIA ......................... 073.0 OVERVIEW OF NDMA ISSUE .................................................................................... 09

3.1 NON-TARIFF BARRIERS ..........................................................................................10

3.1.1 SUBSIDIES ..........................................................................................................10

3.1.2 TECHNICAL BARRIERS TO TRADE ......................................................................... 13

3.1.3 PARA-TARIFFS .................................................................................................... 16

3.1.4 VISAS ................................................................................................................ 17

3.1.5 BANKING ........................................................................................................... 18

3.1.6 NOTE ON “NON-DISCRIMINATORY” NATURE OF NTBS .......................................... 18

4.0 POTENTIAL BENEFITS OF INDIA REDUCING ITS SENSITIVE ..................................... 20

5.0 INDIA’S 2015 FOREIGN TRADE POLICY AND MEIS BRIEF OVERVIEW .........................23

5.1 MEIS ANALYSIS .....................................................................................................23

5.2 MEIS HIGH POTENTIAL PRODUCTS AT 6-DIGIT AND 8-DIGIT HS CODE LEVEL ...........27

5.2.1 BLACK TEA ........................................................................................................27

5.2.2 SOYA BEAN PRODUCTS ......................................................................................28

5.2.3 FOOD PREPARATIONS .......................................................................................29

5.2.4 TOYS.................................................................................................................30

5.2.5 CEREAL PREPARATIONS ...................................................................................... 31

5.2.6 GINGER .............................................................................................................32

5.2.8 MIXTURES OF ODORIFEROUS SUBSTANCES (RAW MATERIALS) ............................33

5.2.9 MIXTURES OF ODORIFEROUS SUBSTANCES (FOOD, DRINK) ................................34

5.2.9 MALT ................................................................................................................35

5.2.10 JUTE ................................................................................................................36

5.2.11 PEPPER ............................................................................................................. 37

5.2.12 TOMATOES ......................................................................................................38

5.2.13 TEXTILE ITEMS .................................................................................................39

6.0 RECOMMENDATIONS .............................................................................................. 40

6.1 REMOVING NTBS ................................................................................................. 40

6.2 PROTECTING LOCAL INDUSTRIES BY STRENGTHENING THE NTC ............................. 41

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SECTION II: ANALYSIS OF HIGH POTENTIAL PAKISTANI EXPORTS ........... 427.0 ANALYSIS OF HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA .............................. 45

7.1 TOP 100 HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA ....................................... 50

7.2AGRICULTURAL PRODUCTS ................................................................................... 60

7.3 PLASTICS .............................................................................................................63

7.4 TEXTILE AND FOOTWEAR..................................................................................... 65

7.5 MACHINERY .........................................................................................................67

7.6 PHARMACEUTICAL PRODUCTS ............................................................................. 69

SECTION III: ANALYSIS OF HIGH POTENTIAL INDIAN EXPORTS ................718.0 ANALYSIS OF HIGH POTENTIAL INDIAN EXPORTS TO PAKISTAN ..............................73

9.1 TOP 100 HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA ........................................78

9.2 AGRICULTURAL PRODUCTS .................................................................................. 86

9.3 MACHINERY ........................................................................................................ 88

9.4 VEHICLES OTHER THAN RAILWAY, TRAMWAY ........................................................ 90

9.5 AUTO SECTOR ......................................................................................................92

9.6 IRON AND STEEL ................................................................................................. 95

9.7 ORGANIC CHEMICALS ..........................................................................................97

SECTION IV: CONCLUSION .......................................................................9910.0 CONCLUSION ....................................................................................................... 101

SECTION V: SECTORIAL PERSPECTIVES ON TRADE NORMALIZATION ...........................103

NOTE FROM GATRON (INDUSTRIES) LIMITED ..................................................................104

ANNEXURES .................................................................................................................106

Annexure A: List of high potential Pakistani exports to India (438 items) ........................108

Annexure B: List of high potential Indian exports to Pakistan (335 items) .........................131

Bibliography ................................................................................................................. 148

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Executive Summary

KEY FINDINGS

Talk of India receiving Most Favoured Nation (MFN)1 status or Non-Discriminatory Market Access (NDMA)2 from Pakistan has dominated the discourse on Pakistan-India trade for several years. While India granted Pakistan MFN status in 1996, and both countries have been subject to SAFTA since 2006, Pakistan is yet to grant India MFN/NDMA status after a series of false starts and delays. Many believe that this decisive move towards a normalized trading regime will help realize the massive potential for trade between the two countries that so far lies largely dormant.

Source: ITC Trademap

Pakistan’s primary exports to India include cotton, cement and copper waste. Pakistan’s exports to India grew from USD 158 million in 2004 to USD 392 million in 2014, but it could only claim 0.09% of total Indian imports from the world in 2014. India’s major exports to Pakistan include tomatoes, polypropylene and soya bean products. India’s exports to Pakistan grew much more significantly over the period under consideration, from USD 454 million to USD 2.1 billion, but it too could only claim 0.63% of total Pakistani imports from the world in 2014.

This study aims to assess the potential for trade between the two countries by analysing products at the 6-digit HS code level using a number of different metrics. It also includes an in-depth discussion of several issues that must be addressed before NDMA status can be granted to India.

158

337 327 292 355235 275 273

348 403 392454577

1,1151,266

1,691

1,080

1,560 1,607 1,573

1,874

2,105

0

500

1,000

1,500

2,000

2,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

USD

Mill

ions

Pakistan's Trade with India

Pakistan's Exports to India Pakistan's Imports from India

1“Most Favoured Nation” (MFN) status is a level of treatment accorded by one state to another in international trade. The term means that the country which is granted this status must receive equal trade advantages as the “most favoured nation” by the country granting such treatment. In other words, a country that has been accorded NDMA status may not be treated less advantageously than any other country with MFN status by the promising country.2Non-DIscriminatory Market Access (NDMA) is another name for Most Favoured Nation status used in recent years by both sides.

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3Pakistan’s negative list for India consists of 1209 items.4Pakistan’s 2014-2015 Federal budget in brief. Retrieved from http://finance.gov.pk/. The following subsidies add up to the total subsidy cited: all subsidies to USC, all subsidies to PASSCO, subsidies for sale of wheat in FATA, sale of wheat in Gilgit Baltistan, sale of salt in Gilgit Baltistan. 5Rs 15b farming subsidy still unconsumed (2015 April 28). The Nation. Retrieved from http://nation.com.pk/.

FEASIBILITY OF GRANTING INDIA NDMA STATUS

Proponents of Pakistan granting India NDMA status maintain that both countries stand to gain increased access to one another’s vibrant markets after years of restrictive policies and trade levels incommensurate with existing potential. Pakistan’s delay in granting India NDMA status has frequently been cited as the only major obstacle to realizing trade potential that would result in a corresponding increase in consumer welfare on both sides of the border.

However, concerns have been raised, especially in Pakistan,regarding the move to grant India NDMA status without challenging the ultimate benefits of a normalized Pakistan-India trade regime. Any consideration of the said benefits must take into account both short-term costs and the time-frame for the long-term benefits to materialize. The current situation vis-à-vis Pakistan-India trade normalization suggests serious short term issues for Pakistani businesses as they try to compete with the influx of cheap and subsidized Indian goods and a comparatively longer time horizon before the expected advantages of open trade relations are seen. This follows from the fact that the abolishment of Pakistan’s negative list3 would grant Indian products unprecedented access to the Pakistani market through the abolishment of the Negative List and land access for Indian exports through the Wagah border. These exports can pose a serious threat to local industry since Indian agriculture and manufactured products are buoyed by heavy government subsidies and economies of scale. Pakistani exports, on the other hand, will face India’s notoriously effective non-tariff barriers, and will likely not receive comparable support from the Pakistani government.

Indian subsidies to domestic industries

India heavily subsidizes several of its domestic sectors. Its 2015 budget earmarked USD 37 billion for major subsidies. In its budget for fiscal year 2014-2015 India allocated USD 18.4 billion (0.95% of GDP) for direct food subsidies. Pakistan’s total food subsidies in its 2014-2015 federal budget amounted to USD 161 million (0.06% of GDP) when added up.4

Pakistan allocated USD 147 million for subsidies to farms in the same year, none of which was disbursed since agriculture became a subject of the provinces and a mechanism to spend the subsidy could not be devised.5 India has drawn the ire of the WTO as a result of its continued subsidies for its textile exports, whereas Pakistan’s subsidies to its textile industry have been deemed grossly insufficient by the chairman of the APTMA (All Pakistan Textile Mills Association).

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India’s Elaborate Non-Tariff Barriers

Pakistan faces several serious non-tariff barriers (NTB) in exporting to India.

Primary Technical Barriers to Trade

1India’s standards regime, which is unique to India and in certain cases does not recognize standards developed and enforced in developed countries.

2India’s complicated and stringent requirements for labelling and packaging, quarantine, certification etc. for many high potential Pakistani export products.

3

India’s complex state-specific requirements which do not allow foreign companies to treat India as ‘one market’. Additionally information on state requirements appears to have deliberately been kept vague in order to discourage foreign companies and to protect domestic commerce from global/regional competitors.

Pakistan’s standard setting body, the Pakistan Standards & Quality Control Authority (PSQCA), lacks the facilities to set and implement standards for Pakistani products. Moreover, PSQCA’s limited certifications are not accepted internationally and this is a serious obstacle to exports since India imposes its standards rigorously. In addition to the Bureau of Indian Standards (BIS) there are a number of organizations in India which deal with standards and certifications for different products. In 2012 Pakistan and India signed a Mutual Recognition Agreement (MRA) which will, after a yet undetermined time frame, allow the PSQCA’s certifications to be accepted in India. However it should be kept in mind that the BIS/PSQCA will only cover a limited number of products. Currently Pakistani businesses trading with India report long waiting periods for certification, complex rules and regulations and exacting authorities. Furthermore, there is little effort by the Pakistani government to support exporters doing business with India.

Pakistan’s National Tariff Commission (NTC) is responsible for carrying out investigations to establish the need for countervailing and anti-dumping duties, but the NTC currently lacks the institutional capacity to properly fulfil its responsibilities in this regard. There are also issues with the NTC legislation which seriously impede the organization’s ability to perform its designated tasks. These are discussed in the first part of this study.

India imposes high para-tariffs on imports, with para-tariffs reaching up to 23% on imported goods, compared to a 12% duty on local producers. On the other hand Pakistani General Sales Tax (GST), which is 17%, is exempt for imports of food, raw materials and capital goods, and therefore while some Pakistani products have a 5% advantage over imports (given a basic customs duty of 5%) others may have none. On the other hand, local producers in India have an advantage over exporters by a margin of at least 10%.

The mutually agreed and implemented visa regime remains relatively illiberal despite some notable improvement in its terms. Multiple entry visas are now available but individuals must have a minimum annual income to qualify. Police reporting on arrival and departure is still required. A business visa holder from Pakistan cannot remain in India for more than 30 continuous days on any one visit and still faces a limit on the number of cities he or she can visit. These are not features of India’s visa policies for other countries such as China and Sri Lanka. The shortcomings of the visa regime on both sides seriously hamper interaction between the two countries’ business communities.

Despite an agreement to issue banking licenses to two banks from each country to set up operations in the other, no substantive progress has been made on issues to do with banking. Currently, letters of credit issued by a bank in one country are often rejected by banks in the other. This results in payment-based delays, defaults and poor default resolution. The delays become more problematic when trade in perishable commodities is involved. In most cases the product crosses the border within a few hours’ time while normal payment channels may require

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days for the transaction to be completed. Problems such as these have a disproportionately negative effect on the more resource-poor country in the trade relationship.

Trade dispute resolution is another major issue for businesses dealings with India. The need to have in place a trade dispute resolution mechanism has been frequently cited by Pakistani businessmen as a major concern regarding trade with India.

Purported benefits of India reducing its SAFTA sensitive list for Pakistan

One of the more rigorous arguments for Pakistan granting India NDMA status cites India’s promise to immediately reduce its Sensitive List for Pakistan to 100 items. The Indian side has repeatedly hinted that most of the items to be removed from the Sensitive List comprise of products within which Pakistan enjoys export competitiveness, though the specific items to be removed are yet to be identified by India. A closer look at the actual benefit of such a concession reveals that this reduction may not necessarily translate into increased exports from Pakistan

India has signed free trade agreements (FTAs) with SAARC (South Asian Association for Regional Cooperation), countries Sri Lanka, Nepal and Bhutan, meaning they are already receiving deep to full concessions on most items exported to India. Moreover, under SAFTA, (South Asian Free Trade Area) Bangladesh faces the Least Developed Countries sensitive list which consists of a mere 25 items as compared to the Non-Least Developed countries sensitive list faced by Pakistan, which runs to 614 items. This study takes a closer look at the terms Pakistan faces in comparison to other countries in the region to conclude that a reduction in India’s sensitive list (the items to be removed have not been specified by India) will not substantially improve Pakistan’s access to the Indian market as Pakistan’s competitors in the region already receive and will continue to enjoy more favourable tariff concessions through their bilateral trade agreements with India, while Pakistan faces higher SAFTA rates. This is an important issue, since unless India offers Pakistan terms similar to those offered to Pakistan’s regional competitors the actual impact of a reduction in the Sensitive List may bring little substantial gain for Pakistan.

Merchandise Exports from India Scheme (MEIS)

The Merchandise Exports from India Scheme (MEIS) is a new export subsidy policy introduced in India’s 2015 foreign trade policy. The objective of MEIS is to offset costs resulting from infrastructural inefficiencies involved in the export of Indian goods, with particular emphasis paid to those commodities which have high export intensity and employment potential.

MEIS consolidates five different schemes from the former trade policy which each had different kinds of duty scrips with varying conditions. Duty free scrips are essentially rebates offered on the purchase of inputs for manufactured products. They are paper authorisations that allow the holder to domestically procure or import inputs or machinery required for manufacturing products that are exported without paying duties/taxes equivalent to the scrip value.

MEIS applies to 1005 items at the 8-digit HS code level where Indian exports to Pakistan are concerned. At the less specific 6-digit level this collapses into a total of 485 items. The total trade potential at the 6-digit level for Indian exports to Pakistan for these 485 items comes out to USD 1.4 billion. USD 1.1 billion of this trade potential resides within 50 items at the 6-digit level. This report provides an analysis of the 485 relevant items to which MEIS applies in an attempt to flesh out the importance of this scheme to Pakistan-India trade. It is therefore clear that the Indian subsidy regime has been further enhanced with a focus on exports and the government of Pakistan must take cognizance of this scheme.

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RECOMMENDATIONS

Protecting local industries and strengthening the NTC

Pakistan must develop institutional apparatus to offer effective protection to those local industries that will need it in the aftermath of NDMA. This is absolutely necessary to avoid a rocky transition and the decimation of local industries as cheap Indian goods suddenly flood the market. Countervailing and anti-dumping duties along with other safeguard measures are the purview of the National Tariff commission. This study raises several concerns about the institutional capacity of the NTC. The most pressing of these (including the afore-mentioned legislation that weakens the position of local industries requesting safeguarding investigations) must be decisively resolved before NDMA is granted. The government does not have the fiscal space to provide subsidies to domestic agriculture and industry, and subsidies would also be in violation of WTO rules in many cases. It is therefore essential that domestic industry, NTC and the government of Pakistan identify the threat of Indian subsidies and rebates and implement an effective counter strategy.

Removing India’s NTBs

Both sides must work to remove non-tariff barriers that impede the other’s exports. While it is true that many of India’s NTBs apply indiscriminately to its trading partners, some of these are specific to items within which Pakistan possesses greater export competitiveness i.e. textiles and agriculture. Moreover, issues having to do with the visa regime and banking are also specific to Pakistan-India trade.

Given the unique nature of the two countries’ relationship, India, in its capacity as the partnership’s stronger economy, needs to take the initiative to ease its NTBs, especially those which specifically impede Pakistan’s high export potential products. This is necessary for the granting of NDMA to be a win-win situation for both countries.

Custom procedures and technical barriers to trade are high priority issues: custom procedures need to be made more efficient and transparent, whereas Pakistan must offer greater assistance to its exporters in negotiating India’s complex standards requirements. India must also work to improve the efficiency of its licensing and certification processes to reduce delays. While some progress has been made on this issue, India needs to do more to assist Pakistan in developing internationally accredited testing facilities which would go a very long way to enabling hassle-free trade between the two countries.

Issues arising from banking appear to be easily remediable: decisive action needs to be taken to set up Indian banks in Pakistan and vice versa. Banking instruments that can keep pace with fast trade transaction times must be developed.

The visa regimes of both countries must be made more liberal since trade cannot show appreciable growth without sustained and uninterrupted interaction between the business communities of the two countries. Both countries need to find an alternative for police reporting and city-specific visas. Furthermore, India needs to make its visa regime for Pakistani businessmen consistent with its other visa regimes.

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ANALYSIS OF HIGH POTENTIAL TRADE ITEMS

Pakistani Exports to India

438 high potential Pakistani export items accounted for trade potential with India worth USD 3.4 billion in 2014. This represented 90% of the total trade potential within the 5541 items with available data for that year. Around 47% of these 438 items have experienced healthy growth in Pakistani world exports and Indian world imports without corresponding growth in Pakistani exports to India during the period 2004-2014. About 12% of these high potential products are already exported by Pakistan to India at a disproportionately high rate compared to the items’ share in Pakistan’s international export basket.

The following table offers an overview of the major export potential areas for Pakistan based on the analysed high export potential items. High potential CAGR items are highlighted in red.

Sector Current ExportsTotal Trade Potential

Major Items Metrics

Textile and Footwear

USD 57 million in 146 items

USD 852 million in 146 items, items below account for USD 390 million of trade potential

HS 6109 (T-shirts, singlets, knitted or crocheted), HS 6203 (Men’s suits, jackets, trousers), HS 6403 (Footwear, upper of leather)

35% high CAGR items, 10% items with bilateral RCA>1, 49% items on India’s sensitive list

HS Code Product labelPak 2014 Exports

to IndiaIndia 2014 World

Imports

Pak 2014 World

Exports

Pak 2014 Trade

Potential

520100Cotton, not carded or combed

36.81 504.12 180.94 144.13

620342Mens/boys trousers and shorts, of cotton, not knitted

0.28 62.07 664.53 61.79

640399Footwear, outer soles of rubber/plastics uppers of leather, nes

0.01 32.15 77.54 32.14

630419Bedspreads of textile materials, nes, not knitted or crocheted

0.00 77.23 28.62 28.62

610910T-shirts, singlets and other vests, of cotton, knitted

0.01 24.94 195.41 24.93

630790Made up articles, of textile materials, nes, including dress patterns

0.00 22.81 36.82 22.81

630140Blankets (o/t electric) and travelling rugs, of synthetic fibres

0.00 48.92 22.25 22.25

551219

Woven fabrics,containg>/=85% of polyester staple fibres,o/t unbl or bl

0.00 18.75 27.43 18.75

610990T-shirts,singlets and other vests,of other textile materials,knitted

0.00 18.12 76.09 18.12

611599Hosiery nes, of other textile materials, knitted

0.00 17.90 57.59 17.90

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Sector Current ExportsTotal Trade Potential

Major Items Metrics

Agricultural Products

USD 81 million in 53 items

USD 360 million in 53 items, items below account for USD 237 million

HS 120740 (sesamum seeds), HS 080410 (dates)

49% high CAGR items, 15% items with bilateral RCA>1, 32% items on India’s sensitive list

HS Code Product labelPak 2014 Exports

to IndiaIndia 2014 World

Imports

Pak 2014 World

Exports

Pak 2014 Trade

Potential

220720Ethyl alcohol and other spirits, denatured, of any strength

0.66 86.33 102.94 85.67

120740Sesamum seeds, whether or not broken

12.36 106.17 65.40 53.04

30289Fresh or chilled fish, n.e.s.

0.00 16.46 19.98 16.46

80410 Dates, fresh or dried 63.64 199.45 79.98 16.33

170490

Sugar confectionery nes (includg white chocolate),not containg cocoa

0.21 15.27 48.61 15.06

121190

Plants &pts of plants(incl sed&fruit) usd in pharm,perf,insect etc nes

1.84 68.50 14.00 12.16

190219Uncooked pasta, not stuffed or otherwise prepared, nes

0.05 10.74 11.34 10.70

30499

Frozen fish meat whether or not minced (excl. swordfish, toothfish and

0.00 11.32 10.42 10.42

151620Veg fats &oils&fractions hydrogenatd,inter/re-esterifid,etc,ref'd/not

0.00 9.54 115.27 9.54

190590

Communion wafers,empty cachets f pharm use&sim prod&bakers' wares nes

0.01 7.67 19.58 7.66

Sector Current ExportsTotal Trade Potential

Major Items Metrics

PlasticsUSD 14 million in 25 items

USD 170 million in 25 items, items below account for USD 140 million of trade potential

HS 3915 (Waste and scrap of plastics) , HS 3920 (Other plates, sheets, films etc. of plastic), HS 3924 (Tableware, kitchenware, toiletry articles of plastic)

29% high CAGR items, 21% items with bilateral RCA>1, 75% items on India’s sensitive list

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HS Code Product labelPak 2014 Exports

to IndiaIndia 2014 World

Imports

Pak 2014 World

Exports

Pak 2014 Trade

Potential

390319 Polystyrene nes 0.19 34.83 52.25 34.63

391590Plastics waste and scrap nes

0.31 103.70 23.14 22.83

392062

Film and sheet etc, non-cellular etc, of polyethylene terephthalates

0.17 49.41 17.37 17.20

392490Household and toilet articles nes, of plastics

0.01 21.02 12.22 12.21

392020Film and sheet etc, non-cellular etc, of polymers of propylene

0.00 71.32 11.03 11.03

391890Floor, wall and ceiling coverings etc, of plastics nes

0.00 14.01 10.94 10.94

392690Articles of plastics or of other materials of Nos 39.01 to 39.14 nes

0.00 677.04 10.22 10.22

392321Sacks and bags (including cones) of polymers of ethylene

0.00 11.65 7.62 7.62

390799Polyesters nes, in primary forms

0.00 178.76 6.46 6.46

390410Polyvinyl chloride, not mixed with any other substances

12.37 174.94 18.27 5.90

Sector Current ExportsTotal Trade Potential

Major Items Metrics

MachineryUSD 0.25 million in 31 items

USD 207 million in 31 items, items below account for USD 163 million of trade potential

HS 8411 (Turbo-jets, turbo propellers and other gas turbines), HS 8414 (air, vacuum pump)

77% high CAGR items, 10% items with bilateral RCA>1, 6% items on India’s sensitive list

HS Code Product labelPak 2014 Exports

to IndiaIndia 2014 World

Imports

Pak 2014 World

Exports

Pak 2014 Trade

Potential

841451Fans: table,roof etc w a self-cont elec mtr of an output nt excdg 125W

0.00 71.54 38.56 38.56

841182Gas turbines nes of a power exceeding 5000 KW

0.00 84.45 23.19 23.19

840710Aircraft engines, spark-ignition reciprocating or rotary type

0.00 149.24 17.68 17.68

841510

Air conditioning machines window or wall types, self-contained

0.00 401.94 16.37 16.37

841199 Parts of gas turbines nes 0.00 199.59 14.46 14.46

841810Combined refrigerator-freezers, fitted with separate external doors

0.00 103.94 12.45 12.45

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841490Parts of vacuum pumps, compressors, fans, blowers, hoods

0.00 405.88 12.27 12.27

843143Parts of boring or sinking machinery, whether or not self-propelled

0.00 351.42 11.77 11.77

847330Parts&accessories of automatic data processg machines&units thereof

0.00 1,429.22 10.01 10.01

841829Refrigerators, household type, nes

0.00 7.78 5.81 5.81

Sector Current ExportsTotal Trade Potential

Major Items Metrics

Pharmaceutical Products

USD 0.15 million in 10 items

USD 170 million in 10 items, items below account for total trade potential

HS 3003 (Medicament mixtures), HS 3004 (Medicament Mixtures)

70% high CAGR items, no items with bilateral RCA>1, 30% items on India’s sensitive list

HS Code Product labelPak 2014 Exports

to IndiaIndia 2014 World

Imports

Pak 2014 World

Exports

Pak 2014 Trade

Potential

300490Medicaments nes, in dosage

0.03 566.25 86.57 86.54

300439Hormones nes, not containing antibiotics, in dosage,o/t contraceptive

0.00 73.05 21.58 21.58

300420Antibiotics nes, in dosage

0.00 24.70 12.87 12.87

300590

Dressings&similar articles,impreg or coatd or packagd for md use,nes

0.00 15.51 12.07 12.07

300390Medicaments nes, formulated, in bulk

0.12 39.47 12.09 11.97

300410Penicillins or streptomycins and their derivatives, in dosage

0.00 19.32 10.90 10.90

300339

Hormones nes,formulatd,not cntg antibiotics,in bulk,o/t contraceptives

0.00 5.98 28.56 5.98

300450Vitamins and their derivatives,in dosage

0.00 5.28 4.76 4.76

300510Dressings and other articles having an adhesive layer

0.00 10.82 1.86 1.86

300310

Penicillins or streptomycins and their derivatives,formulated,in bulk

0.00 1.64 5.94 1.64

Indian Exports to Pakistan

335 high potential Indian export items accounted for trade potential with Pakistan worth USD 21.9 billion in 2014, which represented 81% of the total trade potential within the 4435 items with available data for that year. 53% of these 335 items exhibited significant growth in Indian world exports and Pakistani world imports without corresponding growth in Indian exports to

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Pakistan during the period 2004-2014. About 32% of these high potential products are already being exported by India to Pakistan at a disproportionately high rate compared to the items’ weight in India’s international export basket.

The following table offers an overview of major export potential areas for India based on the analysed high export potential items. High potential CAGR items are highlighted in red.

SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

Agricultural Products

USD 400 million in 23 items

USD 1.2 billion in 23 items, items below account for USD 1 billion of trade potential

HS 090240 (Black tea), HS 230400 (Soya bean oil cake)

22% high CAGR items,69% items with bilateral RCA>1, 30% items on Pakistan’s sensitive list, none on negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

90240Black tea (fermented) & partly fermented tea in packages exceedg 3 kg

22.61 319.19 577.85 296.59

230400Soya-bean oil-cake&oth solid residues,whether or not ground or pellet

186.86 478.91 1,180.72 292.05

100119Durum wheat (excl. seed for sowing)

0.00 185.08 81.14 81.14

40210Milk powder not exceeding 1.5% fat

30.56 108.63 217.06 78.07

210690 Food preparations nes 0.82 71.00 168.44 70.19

80610 Grapes, fresh 0.00 50.05 223.73 50.05

230990Animal feed preparations nes

1.57 50.21 165.15 48.64

190110Prep of cereals,flour,starch/milk f infant use,put up f retail sale

0.38 67.80 34.32 33.94

100610Rice in the husk (paddy or rough)

0.16 29.76 62.30 29.60

91011Ginger : Neither crushed nor ground

10.96 48.06 40.06 29.10

SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

MachineryUSD 26 million in 68 items

USD 1.9 billion in 68 items, items below account for USD 676 million of trade potential

HS 8421 (Centrifuges, incl. centrifugal dryers), HS 8422 (Dish-washing machines), HS 8431 (Machinery part)

35% high CAGR items, 25% items with bilateral RCA>1, 16% items on Pakistan’s negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

841989

Machinery,plant/laboratory equip f treat of mat by change of temp nes

0.58 101.28 145.95 100.70

840999Parts for diesel and semi-diesel engines

0.01 80.49 584.91 80.49

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841480Air or gas compressors, hoods

0.24 79.20 327.18 78.96

848180Taps, cocks, valves and similar appliances, nes

0.17 68.88 717.67 68.71

842230Mach f fil/clos/seal/etc.btle/can/box/ bag/ctnr nes,mach f aeratg bev

1.25 63.44 96.50 62.19

843143Parts of boring or sinking machinery, whether or not self-propelled

0.24 60.89 170.40 60.65

841199 Parts of gas turbines nes 0.00 102.69 57.75 57.75

841590Parts of air conditioning machines

0.00 57.37 71.88 57.37

840991Parts for spark-ignition type engines nes

0.00 56.97 283.34 56.97

847989Machines & mechanical appliances nes having individual functions

1.75 54.19 344.14 52.45

SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

Vehicles other than railway, tramway

USD 0.09 million in 16 items

USD 1.1 billion in 16 items, items below account for USD 1 billion of trade potential

HS 8703 (Cars), HS 8704 (Trucks)

88% high CAGR items, no items with bilateral RCA>1, 94% items on Pakistan’s negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

870321

Automobiles w reciprocatg piston engine displacg not more than 1000 cc

0.00 283.22 1,199.77 283.22

870322

Automobiles w reciprocatg piston engine displacg > 1000 cc to 1500 cc

0.01 212.44 3,236.80 212.43

870323

Automobiles w reciprocatg piston engine displacg > 1500 cc to 3000 cc

0.00 162.00 835.52 162.00

871120

Motorcycles with reciprocatg piston engine displacg > 50 cc to 250 cc

0.00 73.83 1,753.42 73.83

870421Diesel powered trucks with a GVW not exceeding five tonnes

0.00 63.43 271.14 63.43

871410Parts and accessories of motorcycles, incl. mopeds, n.e.s.

0.00 56.02 116.19 56.02

870829Parts and accessories of bodies nes for motor vehicles

0.00 49.87 61.36 49.87

870899 Motor vehicle parts nes 0.08 45.43 2,696.06 45.35

870210Diesel powered buses with a seating capacity of > nine persons

0.00 39.36 259.52 39.36

870422Diesel powerd trucks w a GVW exc five tonnes but not exc twenty tonnes

0.00 36.43 218.70 36.43

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SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

Auto SectorUSD 31 million in 20 items

USD 756 million in 20 items, items below account for USD 600 million of trade potential

HS 4011 (New pneumatic tires of rubber), HS 8409 (Parts for use solely with motor engines)

65% high CAGR items, 20% items with bilateral RCA>1, 60% items on Pakistan’s negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

401120Pneumatic tires new of rubber for buses or lorries

26.86 190.18 575.42 163.32

840999Parts for diesel and semi-diesel engines

0.01 80.49 584.91 80.49

841590Parts of air conditioning machines

0.00 57.37 71.88 57.37

840991Parts for spark-ignition type engines nes

0.00 56.97 283.34 56.97

848310Transmission shafts and cranks, including cam shafts and crank shafts

0.00 50.17 255.69 50.17

870829Parts and accessories of bodies nes for motor vehicles

0.00 49.87 61.36 49.87

870899 Motor vehicle parts nes 0.08 45.43 2,696.06 45.35

848210 Bearings, ball 0.14 38.45 58.38 38.31

841430Compressors of a kind used in refrigerating equipment

0.33 132.24 32.89 32.57

842139Filtering or purifying machinery and apparatus for gases nes

0.13 26.36 104.58 26.23

SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

Iron and SteelUSD 0.09 million in 32 items

USD 1.2 billion in 32 items, items below account for USD 768 million of trade potential

HS 7208 (Flat-rolled products of iron, not clad), HS 7210 (Flat-rolled products of iron, plated or coated)

75% high CAGR items, no items with bilateral RCA>1, 50% items on Pakistan’s negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

721049

Flat rolled prod,i/nas,plated or coated with zinc,>/=600mm wide, nes

0.00 170.20 993.27 170.20

720839Hot roll iron/steel nes, coil >600mm x <3mm

0.00 153.83 303.68 153.83

720838Hot roll iron/steel nes, coil >600mm x 3-4.75mm

0.00 85.21 124.31 85.21

730423Drill pipe, seamless, of a kind used in drilling for oil or gas, of ir

0.00 67.77 76.42 67.77

721990Flat rolled prod, stainless steel, 600mm or more wide, nes

0.00 58.66 89.47 58.66

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730429Casings,,tubing, drill pipe, for oil drilling use

0.00 58.04 58.22 58.04

720916Cold rolled iron/steel, coils >600mm x 1-3mm

0.00 50.96 53.58 50.96

722530Flat rolled prod,as,o/t stainless,in coils,nfw thn hr,w>/=600mm,nes

0.00 171.02 45.98 45.98

730890Structures&parts of structures,i/s (ex prefab bldgs of headg no.9406)

0.01 42.52 418.03 42.51

721012

Flat rolld prod,i/nas,platd or coatd with tin,>/=600mm wide,<0.5mm thk

0.00 35.19 57.70 35.19

SectorCurrent Indian Exports

to PakistanTrade Potential Major Items Metrics

Organic

ChemicalsUSD 152 million in 24 items

USD 785 million in 24 items, items below account for USD 586 million of trade potential

HS 2902 (Cyclic Hyrdrocarbons), HS 2941 (Antibiotics)

21% high CAGR items, 67% items with bilateral RCA>1, 25% items on Pakistan’s negative list

HS Code Product labelIndia 2014

Exports to PakPak 2014 World

Imports

India 2014 World

Exports

India 2014 Trade

Potential

290243 P-xylene 113.66 349.34 1,027.79 235.68

290531Ethylene glycol (ethanediol)

0.05 202.91 87.23 87.18

294190 Antibiotics nes, in bulk 8.15 65.55 581.84 57.40

293499Nucleic acids and their salts, whether or not chemically defined; hete

3.18 53.66 382.03 50.48

292690Nitrile-function compounds, nes

0.02 34.69 41.76 34.67

292249Amino-acids nes, and their esters; salts thereof

0.59 29.45 68.83 28.86

293339Heterocyclic compds cntg an unfused pyridine ring in the structure,nes

5.80 30.32 323.88 24.52

292910 Isocyanates 0.16 34.63 24.30 24.14

293359Hetercycl compds cntg pyrimidin rng/piperazine rng,nes;nucleic acid&sa

1.15 22.83 179.90 21.69

290511Methanol (methyl alcohol)

0.01 49.80 21.67 21.66

Both sides show considerable trade potential with the other relative to the sizes of their economies. India and Pakistan both place around 30% of the analysed high potential products on their sensitive and negative lists respectively. However, India offers deeper protection to items within Pakistan’s major export potential sectors than does Pakistan to items within India’s major export potential sectors.

This analysis suggests that Pakistan-India trade has been conspicuously lacklustre within a large number of items that have experienced positive trends within trade with the rest of the world. Moreover, some of the high potential items currently claim larger shares of the export basket to the other country than they do in the exporting country’s export basket to the world, suggesting that these items will find especially lucrative markets in the importing country as trade is normalized.

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CONCLUSION While there is no doubt considerable trade potential that currently lies dormant between Pakistan and India, granting India NDMA without resolving the issues detailed in this study will result in a one-sided realization of this potential, squarely in India’s favour. • India, in addition to possessing very high export potential to Pakistan, offers substantive

support to its producers in the form of subsidies and export support schemes and maintains intractable Non-Tariff Barriers to discourage imports.

• Pakistan possesses considerable export potential to India, but it offers little support or protection to its producers and exporters, and has relatively low Non-Tariff barriers.

• Therefore,hugequantitiesofIndianproductsthatarecheaperthanlocalPakistaniproducts can easily enter Pakistan post-NDMA.On the other hand, low quantitiesof Pakistani products that will in many cases be less competitive than local Indian productswillenterIndiawithdifficultlypost-NDMA.

If NDMA is to lead to a mutually beneficial trade relationship, the following issues must be decisively addressed: • India must agree to gradually ease its Non-Tariff Barriers.

• Pakistan must build capacity to support its exports and protect local industry from subsidized imports.

• The details and time-frame of India’s promised concessions to Pakistan must be determined and considered before the granting of NDMA.

• India’s concessions to Pakistan must be consistent with its concessions to other SAFTA countries such as Bangladesh and Sri Lanka to ensure Pakistan gains fair access to the Indian market post-NDMA.

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1.0 STUDY OBJECTIVES

This study is divided into two major sections: the first discusses the feasibility of Pakistan granting India NDMA status and includes an overview of Indian non-tariff barriers as well as the SAFTA agreement, while the second estimates the potential for bilateral trade between Pakistan and India.

The second section primarily identifiesa) items possessing high potential for export from Pakistan to Indiab) items possessing high potential for export from India to Pakistan

Sources of Data

The trade data for this study has been drawn from ITC Trademap for the period ended 20146, which bases its data on UN Comtrade, maintained by the United Nations Statistics Division (UNSD). Any quarterly and monthly data is drawn by Trademap from national and regional sources.

Indian tariffs and para-tariffs have been calculated using WTO’s Tariff Download Facility, the Indian customs portal, and notifications issued by the Indian government available on the Indian Central Board of Excise and Customs website. Pakistani tariffs have been calculated using WTO’s Tariff Download Facility as well as Pakistan’s custom portal. SAFTA tariffs are checked against Indian notifications available on the Indian Central Board of Excise and Customs website. Tariff data provided is for the period ended 2013. Data for India’s top import destinations was drawn from the Indian Department of Commerce website’s export import data bank.

Methodology

This study uses three different measures to provide a simple but substantive picture of export and import items individually as well as in aggregate form: trade potential, CAGR values, and bilateral RCA.

Trade Potential

Intuitively,tradepotentialisthetheoreticalextenttowhichtradeofagivenitemcanbeexpanded,whichsuggeststheactualscopeforgrowthintradeofthatitem. It is given by the following equation:

Trade Potential=

(India’s imports from the world of X – Pakistan’s current exports to India of X) if {(Pakistan’s exports to the world of X) – (India’s imports from the world of X)} > 0

And

(Pakistan’s exports to the world of X – Pakistan’s current exports to India of X) if {(India’s imports from the world of X) – (Pakistan’s exports to the world of X)} < 0

For instance, if Pakistan exports USD 500 million worth of cement to the world, and India imports USD 300 million worth of cement from the world, and Pakistan exports USD 40 million

62014 was the last year for which complete data was available.

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worth of cement to India, then trade potential is USD 260 million, since Pakistan has the capacity to export USD 260 million worth of cement to India given India’s import requirements.

Trade potential is a useful way to limit an analysis of trade items to those that already have established production capacity in the exporting country and healthy demand in the importing country. It should be kept in mind that this measure therefore does not strictly tell us about items whose production capacity in the exporting country could be developed for exports, and whose demand in the importing country could emerge.

CAGR

Intuitively,theCompoundAnnualGrowthRateistherateatwhichavaluewouldhavegrown over a certain period if it had grown smoothly. CAGR is the geometric mean of the individual annual growth rates during a period. It therefore gives you the growth rate that would have gotten your initial value to your final value had the value grown smoothly over the relevant period. It is given by:

If the CAGR for Pakistan’s world exports of a good is high, and the CAGR for India’s world imports of that good is high, but the CAGR for export of that good from Pakistan to India is low or negative, the item has been highlighted, since the removal of an obstruction that is potentially specific to Pakistan-India relations can jump-start trade of the good between the two countries. This kind of product will be said to have high potential CAGR values.

High potential CAGR products are highlighted in red in this study.

CAGR values provide an idea of a trade item’s profile over a period of time, and are suggestive with regards to expectations about future growth in exports and imports. An attempt has been made in the calculation of CAGR values to adhere to rules that result in CAGR values that are roughly accurate representations of the trends in the exports and imports of the items, since the usefulness of a CAGR value is limited in cases where growth is very spotty or irregular.7

Bilateral RCA

Intuitively,abilateralrevealedcomparativeadvantage(bilateralRCA)valuethatisgreaterthan 1 indicates that the exporting country’s product X is exported to the importing country at a greater rate than it is to the rest of the world. This does not mean that exports of X are greater in absolute terms to one importing country as opposed to another- it means that X claims a greater share of total exports to the importing country than the share it claims

]

7 All CAGR values are calculated for the period 2004-2014. CAGR values have only been calculated if there are at least 3 consecutive years of recorded exports and at least one year of recorded exports within the period 2011-2014. This is so that the numbers used are recent and consistent enough to be suggestive of future trends. “_” indicates that these requirements are not met, or in the case of non-CAGR values, unavailability of data. “_*” indicates that while export numbers were reported in 2014, the years before did not meet the requirements. As a result this generally indicates very spotty and/or low growth in that particular item and therefore the item should be considered to have not performed well in terms of exports/imports. A value preceded by “*” indicates that while there were no recorded exports in 2014, the previous years’ numbers met the afore-mentioned requirements for calculating a CAGR. It should be noted that CAGR values furnish a suggestive but imprecise picture of growth trends, since very volatile growth cannot be represented accurately using measures such as CAGR or AAGR (annual average growth rate).

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8Bhattacharya, Ruma (2011). Revealed comparative advantage and competitiveness: A case study for India in horticultural products. International Conference on Applied Economics 2011. pp 23.9Ferto, Imre and Hubbard, Lionel (2002). Revealed Comparative Advantage and Competitiveness in Hungarian Agri-Food Sectors.

of total world exports of the exporting country. It is given by the following, as formulated in Riaz and Jansen (2012):

This measure is based on revealed comparative advantage formulated in Balassa (1965). It is given by:

Bilateral RCA is used here instead of RCA because this study focuses on a bilateral trade relationship, namely that between India and Pakistan. An RCA value below 1 for Pakistani export X does not necessarily mean that X is not a competitive export to any particular trade partner, such as India. Bilateral RCA values are specific to trading partners and reveal items that are currently competitive exports to the trading partner in question i.e. they weigh heavier in Pakistan’s export basket to India than they do in its export basket to the world. So a country may not show a global RCA within a certain product while still showing a bilateral RCA with a specific country, suggesting that the relevant product is finding a “disproportionately” large market in the importing country.

It should be noted that RCA indices are not thought to be satisfactory as cardinal and ordinal measures, and so they should be interpreted in a binary fashion (greater than 1 or less than 1.)8 9

It is very important to keep in mind that RCA indices are not a measure of comparative advantage, which is concerned with potential gains from trade based on factor endowments or technological progress, but rather measure revealed comparative advantage, which takes into account actual trade figures. In reality, it is not strictly necessary that trade figures represent underlying comparative advantage, since actual trade may be heavily distorted by government policies and other real-world factors (this is particularly relevant to a country like Pakistan which has several ill-considered and ineffective policies). Therefore, a product with a RCA>1 is not necessarily a product within which the relevant country has a comparative advantage, since it may, for instance, simply have been heavily subsidized to placate a particularly influential industry. However, RCA indices still point us in the direction of items within which it is at least likely that a country has a true comparative advantage, and are a very useful measure that can be calculated using readily available data.

Overview of methodology

These three measures, taken together, provide a concise picture of trade items individually and in aggregate form. Trade potential tells us the state of demand and supply of the traded item in the importing and exporting country respectively, CAGR values tell us how global trade of the item over a certain period by India and Pakistan compares to its trade between India and Pakistan, and bilateral RCA values tell us whether an item is being exported to the importing country at a “disproportionate” rate, suggesting that the importing country possesses a good market for the item.

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The three metrics are grouped together in the tables featured in this study in the following arrangement:

Pak 2014 Trade Potential

Pak-India CAGR India Import CAGR Pak Export CAGR Bilateral RCA

312.08 29.26% 12.46% 7.86% 1.47

Note: An attempt has also been made to ensure that items with significant trade potential at the 6-digit level actually exhibit said potential at the 8-digit level- since 6-digit items can be disaggregated into several 8-digit items, which are more specific categorizations of goods, and trade potential values are calculated using the cumulative exports and imports at the 6-digit level (by adding the numbers associated with each 8-digit item within it), it is possible that while one country reports large imports of product X at the 6-digit level and another country reports large exports of product X at the 6-digit level, the exports and imports for both countries at the 8-digit level are within different products for each country, and so there is a “hidden” mismatch and the potential is overstated. Because trade potential calculated at the 6-digit level considers the cumulative trade figures at the 8-digit level the potential can only be overstated and never understated. Since Pakistan and India’s 8-digit HS codes are not harmonized (they do not share the same labels), and since 8-digit data is often spotty and incomplete, it is not possible to perform trade analysis for Pakistan and India at the more accurate 8-digit level. However, in certain cases it is possible to check whether the 8-digit numbers support the trade potential at the 6-digit level by comparing product descriptions, which contain information about the salient features of the product. An effort has been made in this report to check very high potential items for this possible discrepancy, though it is not possible to completely remove this inaccuracy from the analysis performed in the study.

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2.0 BACKGROUND TO STUDY

India granted MFN status to Pakistan in 1996. The SAFTA agreement came into force on 1st January 2006, resulting in tariff concessions by both India and Pakistan. The final step towards normalized trade relations between the two countries is thought to be NDMA status for India to be granted by Pakistan. In a concrete overture towards liberalized trade Pakistan abolished its positive list in favour of a negative list of 1209 items in early 2012, and both countries had already cut down on their SAFTA sensitive lists in 2011. Moreover, recent years saw substantial if halting progress on the core issue, with NDMA for India reportedly approaching finalization several times, before a recent cooling down on the long-gestating matter. However, political impediments notwithstanding, NDMA status (or Non-Discriminatory Market Access) for India remains the primary question of Pakistan-India trade normalization.

Pakistan’s exports to India stood at USD 337 million in 2005 and at USD 392 million in 2014. On the other hand, Pakistan’s imports from India stood at USD 576 million in 2005 and USD 2.1 billion in 2014. This, along with the overall trend in Pakistan’s trade with India, strongly suggests that while India has made considerable strides in finding a market for its exports in Pakistan, Pakistan has largely been unable to boost its exports to India.

It is also worth noting that Pakistan has lagged behind Bangladesh and Sri Lanka, members of SAARC and part of the SAFTA agreement, in exports to India. This is important to keep in mind since SAFTA has been the most significant move towards trade liberalization in the region. India and Pakistan were expected to be the main drivers of trade once SAFTA came into effect, though it is clear that Pakistan’s trade with India remains incommensurate with the huge potential for trade that is thought to exist between the two countries. Pakistan’s relatively poor export performance with India post-SAFTA can be accounted for in part by Bangladesh facing a much shorter sensitive list under SAFTA from India, as well as Sri Lanka’s Free Trade Agreement with India. The specifics of these terms are covered in greater detail later in the study.

158

337 327 292 355235 275 273

348 403 392454577

1,1151,266

1,691

1,080

1,560 1,607 1,573

1,874

2,105

0

500

1,000

1,500

2,000

2,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

USD

Mill

ions

Pakistan's Trade with India

Pakistan's Exports to India Pakistan's Imports from India

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Several explanations have been offered for Pakistan’s disappointing performance vis-à-vis trade with India, including the efficacy of India’s non-tariff barriers and the Pakistani government’s inadequate support of export industries. With NDMA still under consideration, it is imperative that a closer look is taken at what Pakistan can expect to gain and what it can expect to lose in NDMA’s aftermath. It is also important to review the specifics of either country’s trade potential with the other by pinpointing particularly promising export areas. This information taken in tandem with concerns regarding NDMA and the current direction of trade policy can give us an idea of where things are headed for Pakistan-India trade, and whether the impending outcome is feasible.

158

337 327 292 355235 275 273

348 403 392454577

1,1151,266

1,691

1,080

1,560 1,607 1,573

1,874

2,105

0

500

1,000

1,500

2,000

2,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

USD

Mill

ions

Pakistan's Trade with India

Pakistan's Exports to India Pakistan's Imports from India

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SECTION I : FEASIBILITY OF

GRANTING NDMA TO INDIA

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10No going back on NDMA, India told (2011, November 10). Dawn. Retrieved from http://www.dawn.com/.

3.0 OVERVIEW OF NDMA ISSUE

The normalization of trade between Pakistan and India ostensibly has much to recommend it- both economies stand to gain increased access to one another’s vibrant markets after years of restrictive policies and trade incommensurate with the existing potential, with Pakistan standing to benefit in particular from further concessions granted by the economic giant as well as through capital investment and joint economic ventures that are expected to accompany trade normalization.

This line of thinking has raised concerns about Pakistan dragging its feet after promising to grant NDMA status to India, with 2011 and 2012 having seen substantive overtures10 towards finalizing the process in the form of renewed dialogue between the two countries before a loss of momentum.

However, concerns have been raised about the move to grant India NDMA status without challenging the ultimate benefits of liberalized Pakistan-India trade. Any consideration of said benefits must take into account both short-term costs and the time-frame for these long-term benefits to materialize. The current situation vis-à-vis Pakistan-India trade strongly suggests serious short term losses to Pakistan and a very long gestation period before the expected advantages of open trade relations can be claimed.

The overall argument against rushing to grant India NDMA status is best understood by considering two broad problems that could arise in its wake as Pakistan abolishes its negative list:

• Indian products would gain unprecedented access to the Pakistani market on the back of direct and indirect subsidies offered by the Indian government (in addition to economies of scale) and insufficient countervailing measures by Pakistan. This would lead to many local industries facing an unfair and devastating level of competition from cheap Indian products.

• Pakistani products would make only modest inroads into the Indian market due to Indian para-tariffs, countless non-trade barriers, and more favourable tariffs available to other countries in the region. The shortcomings of the Pakistani government in ensuring proper standards for domestic manufacturers would severely impact their ability to penetrate the Indian market. While it is true that the para-tariffs and many NTBs also apply to other countries India trades with, Pakistan’s relatively liberal import regime and Pakistan-India specific NTBs place it at a significant disadvantage to India’s other trading partners.

Pakistan’s already precarious economic situation may not be able to weather the storm that could arise from granting India NDMA status given the current constellation of issues surrounding Pakistan-India trade. While NDMA status should be kept on the table, much work needs to be done to resolve the afore-mentioned issues lest NDMA backfire. In this section of the study we will attempt to identify issues that must be dealt with decisively before granting India NDMA status. We will also discuss the potential benefits of India’s promised shortening of its SAFTA sensitive list for Pakistan once NDMA is granted.

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11Kee, H, Nicita, A, Olarreaga, M (2009).Estimating trade restrictiveness indices. Economic Journal 2009, vol. 119 pp. 172-199.12Pasha, H, Imran, M (2012).The Prospects for Indo-Pakistan Trade. The Lahore Journal of Economics pp. 307-308.13Bailing out from Bali (2014, August 9). The Economist. Retrieved from http://www.economist.com14Indian textile export subsidy under WTO scanner. The Indian Express. Retrieved from http://www.indianexpress.com.

3.1 NON-TARIFF BARRIERS

India imposes several non-tariff barriers on imports while heavily supporting its own exports, and this should be cause for particular concern to a country with a much weaker economy such as Pakistan when mulling over free trade with India. In 2012 the World Bank calculated the overall trade restrictiveness index (OTRI) for several countries, and its findings suggest that India has a heavily protectionist trade policy. The OTRI calculates the uniform tariff that will keep its overall imports at the current level when the country in reality has different tariffs for different goods.11 According to the values calculated in 2012 India had the highest OTRI in not only South Asia but the rest of Asia as well, with NTBs impacting the OTRI value by a relatively high amount. In comparison Pakistan’s OTRI is much lower, with a relatively low contribution by NTBs to its magnitude.12

Country OTRIPercentage increase in OTRI

due to NTBs

India 46.7 24.5

China 21.2 9.9

Bangladesh 23.8 0.8

Pakistan 22.2 5.1

In light of India’s continuing legacy of protectionist policies, what benefits can Pakistan realistically hope to accrue by granting India NDMA status and gaining some reciprocal slackening of restrictions? In this section we will survey India’s NTBs, with emphasis on those that stand to impact Pakistan the most given the challenges it already faces.

3.1.1 SUBSIDIES

Many Indian products are given significant artificial boosts to their competitiveness through aggressive government subsidies. India has yet to shake off its dogged protectionist reputation. Its 2015 budget earmarked USD 37 billion for major subsidies, with USD 20 billion reserved for food subsidies during the fiscal year 2015-2016. India’s continuing use of subsidies within certain areas has drawn the ire of the WTO and objections from the US and other countries.13

14The recent announcement of the MEIS scheme (analysed later on in this report) promises more comprehensive and streamlined support to Indian exports. India also offers stable and generous support to its farmers and manufacturers by subsidizing inputs such as water and power. Granting India NDMA would lead to lower restrictions on certain Pakistani exports to India, but exports would still be competing against heavily subsidized domestic products in India. At the same time, NDMA would open up Pakistan’s markets to artificially low-cost items from India. Pakistan, on the other hand, has faltered in providing similar support to its own industries, and also lacks the resources to set the appropriate countervailing duties to counteract India’s subsidies, leaving local industries particularly exposed.

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Agricultural products

Agricultural protection in India is very high. In its budget for fiscal year 2014-2015 India allocated USD 18.4 billion (0.95% of GDP) for direct food subsidies. Pakistan’s total food subsidies in its 2014-2015 federal budget amounted to USD 161 million (0.06% of GDP) when added up15. Pakistan allocated USD 147 million for subsidies to farms, none of which was disbursed since agriculture became a subject of the provinces and a mechanism to spend the subsidy could not be devised.16 Moreover, Pakistan does not currently directly subsidize its agricultural sector, Moreover, Pakistan does not currently subsidize its agricultural sector, with the exception of a subsidy to wheat.

India’s 1.15 trillion rupees (USD 18.8 billion) spending on food subsidies in 2012 touched 1% of GDP, double what it was in 2009. This figure does not count subsidies to farmers for fertilisers, tractor fuel and the like, which are also considerable. As of fiscal year 2012, India offered subsidies on fertilizer worth a total of USD 15 billion. Other subsidies went to irrigation (USD 6.3 billion), electricity consumption by farmers (USD 7.3 billion) and to other inputs like seed, tractors, crop insurance, etc. (USD 8.8 billion). The total agricultural subsidy bill for India in FY12 was estimated at USD 3.7 billion, equivalent to 2.2 % of the GDP.17

On the other hand in FY12 Pakistan spent USD 356 million on fertiliser (net of the GST on the input). Other subsidies are for irrigation (USD 193 million), electricity and others (USD 342 million). The total subsidy aggregates to USD 897 million, which is 0.4 % of the GDP. Therefore, controlling for the size of the economy, Indian subsidies to agriculture are five and a half times as much as those imposed by Pakistan.18

Under WTO regulations, trade-distorting subsidies to farmers in a developing country cannot exceed 10% of the total value of its harvests, but under a new food-security law, India is adopting a USD 4 billion-a-year scheme to provide cheap food for 800 million people. This means that the minimum support prices offered to farmers will continue to increase. If these measures breach the 10% limit, India will be in violation of WTO rules. However, the government insists it will not sacrifice food security for the sake of WTO compliance, making its commitment to subsidies clear.19 It has been argued that India’s policy of subsidizing certain crops at home and restricting imports through tariffs and NTBs ultimately hurts its food security instead of protecting it, since India is left vulnerable to shocks resulting from reduced crop output at home because it is not integrated into the global market.20 However, India remains committed to providing these subsidies.

It should also be noted that in addition to heavy subsidies, India maintains average WTO bound tariffs of 119.1%, and an average NDMA applied rate of 35.1% on the same. This allows India to frequently vary its applied rates on products such as sugar, rice and wheat, creating instability for agricultural exports. When there is a shortfall in domestic production, the applied rates are dropped to cushion the blow to consumers, whereas a surplus will often lead to a rise in the applied rates to aid farmers.

15Pakistan’s 2014-2015 Federal budget in brief. Retrieved from http://finance.gov.pk/. The following subsidies add up to the total subsidy cited: all subsidies to USC, all subsidies to PASSCO, subsidies for sale of wheat in FATA, sale of wheat in Gilgit Baltistan, sale of salt in Gilgit Baltistan. 16Rs 15b farming subsidy still unconsumed (2015 April 28). The Nation. Retrieved from http://nation.com.pk/.17Agriculture subsidies: Pakistan versus India (2014 March 28). The Business Recorder. Retrieved from http://www.brecorder.com/.18Ibid.19Bailing out from Bali (2014, August 9). The Economist. Retrieved from http://www.economist.com20Pearson, Dan. India’s Dangerous Food Subsidies (2014, August 27). The Diplomat. Retrieved from http://thediplomat.com/.

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21India textile export subsidy under WTO scanner (2015, January 3).The Indian Express. Retrieved from http://indianexpress.com/.22Waleed, Hamid. Textile specific subsidies in India make Pakistan industry uncompetitive: APTMA (2015, January 28). The Business Recorder. Retrieved from http://www.brecorder.com/.

All of this strongly suggests that NDMA would serve to cement India’s advantage in the export of agricultural products to Pakistan and thereby pose an unfair level of competition to domestic producers. Furthermore, Pakistan lacks the financial space and the institutional capacity to either sufficiently increase its own subsidies or apply appropriate countervailing duties to offset India’s subsidies. Hence it would be able to do little to stem the inflow of cheap Indian goods post-NDMA.

Textile products

India currently subsidizes its textile exports in what is thought by some to be a direct violation of WTO policy. The WTO’s Agreement on Subsidies and Countervailing Measures states that when the share of a developing country (with per capita income below USD 1,000 a year) in global exports reaches 3.25% in any product category for two consecutive years, it can be said to have gained “export competitiveness” and must phase out all export subsidies within eight years from the second year of breach.

The US contends that India’s “textiles and clothing” exports exceeded the WTO set limit in 2005 and remained above that level in 2006. It therefore must end its export subsidies for these items by January 2015. It is difficult to countenance subsidies to Indian textile exports given the country’s competitiveness within the product category. India’s share in world trade for textile and clothing was 4.66% in 2013 with exports worth USD 37 billion. Textile and clothing exports contribute more than 10 per cent to India’s export basket. They are the fourth largest product group in India’s outbound shipment basket.21

India also has the long-running Technology Upgradation Fund Scheme (TUFS) for its textile sector. This popular scheme incentivises the development of modern technological processes within the textile industry by offering reimbursements and subsidies to industrialists who take measures that fall within the scope of the scheme.

On the other hand, Pakistan’s textile policy for 2014-19 allocated Rs. 64 billion for the sector, which was dismissed as being insufficient by the chairman of APTMA (All Pakistan Textile Mills Association). The chairman stated that a subsidy of Rs. 200 billion was required given the industry’s needs. It should also be noted that Pakistan has a spotty track record of actually sticking to its subsidy schemes: Rs. 180 billion were allocated to textile subsidies in the Textile Policy 2009-14 whereas only Rs. 28 billion were actually disbursed.22

Pakistan’s National Tariff Commission

The granting of NDMA will undoubtedly lead to demands from certain local industries for safeguard measures (defined under SAFTA) against the sudden heavy competition from Indian products. These need to be investigated by the National Tariff Commission. However, the NTC faces several serious challenges to fulfilling its responsibilities.

There are currently major legislative hurdles to the effective functioning of the NTC: under The Anti-Dumping Ordinance, 2015 Section 70 (1) (i) and Countervailing Duties Ordinance, 2015 Section 32 (2) (a) any interested party can appeal to the appellate tribunal against the initiation of and investigation or a preliminary determination by the NTC. Granting the right of appeal at the initiation of an investigation raises the risk of abuse as any investigation can be delayed by the misuse of the section. The right of appeal should instead be granted at the

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completion of the investigation. No action has been taken so far on this issue. Furthermore, even if the appellate tribunal is able to give a ruling, if the petitioner wishes to challenge the decision of the tribunal he must bring the issue before the judiciary. However, the judges who handle these cases are not aware of the relevant trade regulations and this sometimes leads to a miscarriage of justice. Another issue that has been identified is that in order to receive safeguard measures an industry must be able to present a precedent, meaning they must already have evidence of damage incurred by dumping, artificially cheap imports etc. Yet the point of safeguard measures is to pre-empt such damage, and therefore it makes little sense for their instatement to depend on such damage already having occurred for a period. For this reason it is necessary that pre-emption of damage resulting from dumping be covered by the relevant legislation.

Under the NTC ordinance, 2015, the NTC is now responsible for performing trade research, tariff rationalization and harmonization of HS codes. These tasks are essential to the promotion of Pakistani trade and yet the NTC simply does not at the current time possess the resources to undertake them successfully.

The NTC therefore lacks the institutional capacity to fulfil its myriad responsibilities. It would be irresponsible to grant NDMA without first developing the NTC as an institution and equipping it with the expertise and resources to perform its primary functions. Pakistan stands to expose itself to serious economic harm if the NTC remains toothless post-NDMA.

India’s unswaying commitment to subsidies and Pakistan’s ineffective protection of its own high potential industries are abundantly clear. NDMA status should not be granted without fully considering both the effects India’s subsidies would have in the case of unrestricted trade on local Pakistani industries, and the resources that would be required to protect and support said industries once India is given NDMA status.

3.1.2 TECHNICAL BARRIERS TO TRADE

Primary Technical Barriers to Trade

1India’s standards regime, which is unique to India and in certain cases does not recognize standards developed and enforced in developed countries.

2India’s complicated and stringent requirements for labelling and packaging, quarantine, certification etc. for many high potential Pakistani export products.

3

India’s complex state-specific requirements which do not allow foreign companies to treat India as ‘one market’. Additionally information on state requirements appears to have deliberately been kept vague in order to discourage foreign companies and to protect domestic commerce from global/regional competitors.

India has a famously strict regime for quality standards, with 24 standard setting bodies. The Bureau for Indian Standards (BIS) sets standards for 14 sectors including civil engineering, food and agriculture. Pakistan’s standard setting body (PSQCA) lacks the facilities to properly certify Pakistani products, and this is a serious obstacle to exports since India imposes its standards rigorously and does not accept PSQCA certifications (though it has signed an agreement with BIS which we discuss later in this section).

The general experience of Pakistani exporters trading with India seems to involve long waiting periods for certification, complex rules and regulations and very exacting authorities. Furthermore, there is little effort by the Pakistani government to support exporters doing business with India- for example, the government could fast-track the development of quality testing facilities within Pakistan or trade bodies could simply work to apprise exporters of the

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oftentimes state-specific Indian standards for import items, but no such measures have been taken as of yet.

The consequences of Indian standards and the capacity of the PSQCA are most relevant where items such as agriculture products, textiles and cement are concerned, since these are products with high potential for Pakistani exports to India (certain products, such as textile products, stand to be removed by India from its sensitive list under SAFTA in return for Pakistan’s granting of NDMA). While India’s enforcement of its standards will impede the flow of Pakistani products into India, Pakistan’s standards bodies may in fact let in faulty goods from India due to their lack of resources.

While the primary impediment to agricultural exports is India’s aggressive support of its domestic product via subsidies and high tariffs on Pakistani products, there is still a multiplicity of complex rules and regulations that agricultural products must conform to in order to be imported into India. Moreover, standards for several products vary state-by-state. The low standards imposed by the PSQCA may mean that Indian quality control bodies are more wary of Pakistani products than products from other countries, which would explain the inordinate difficulties reported by Pakistani exporters in satisfying the necessary requirements. Moreover, obtaining the Sanitary and Phytosanitary (SPS) certificates and fulfilling quarantine and testing requirements for agricultural products takes a long time. Facilities for these tests are only available in Delhi and Mumbai, which compounds the problem.

Textile exports to India require a pre-shipment certification from an accredited laboratory on the use of hazardous dyes. Due to Pakistan’s dearth of internationally accredited quality control facilities this too frequently takes a long time, since businessmen are forced to use foreign facilities. Stringent SPS requirements apply to textiles as well and once again Pakistani exporters face problems in meeting them due to the lack of resources within Pakistan. India’s SPS and related standards and tests are most comprehensive and exacting for agricultural and textile products, which are the two areas within which Pakistan is thought to have the highest export potential to India. 23

The BIS Certification requirement for cement is as rigorous and involved as the afore-mentioned standards and has a validity of one year. The stipulated period of certification procedures for renewal is between three to four weeks. However, in case of Pakistani companies exporting cement to India, it reportedly takes more than six months, which is a major disadvantage to exporters.

Other Pakistani exports with significant potential also face demanding standards. For leather items samples of the consignment must be sent to testing laboratories that are located far away from the port of entry in India, whereas in the case of processed foods, products must have 60% of the shelf life at the time of import, and it has been alleged by exporters that this shelf life is determined without transparency. In the case of pharmaceutical products Pakistani exporters have said that the mandatory registration of the drug in question with the Central Drug Standard Control Organization in India is a difficult and time-consuming process.

More generally, most items imported by India face the following preconditions: labelling requirements, packaging requirements, quarantine requirements, certification and standards requirements and testing requirements.

23Pasha, H, Imran, M (2012). Pakistan-India Trade Liberalization: the impact of Non-Tariff Barriers, p. 43. Retrieved from http://pdf.usaid.gov/.

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Requirements Description

1. Labelling Applies to certain items, cumbersome

2. Packaging Applies to certain items, not cumbersome

3. QuarantineApplies to items such as food and raw cotton, cumbersome due to lack of facilities for road, rail consignments

4. CertificationApplies to most items, cumbersome due to delays in procuring certification from relevant bodies

5. TestingApplies to most items, cumbersome due to distance of testing facilities located in Delhi and Mumbai

Labelling requirements are cumbersome to fulfil and entail ensuring that the brand name and serial number of the product in question are provided. The issue here is that India does not have a common labelling requirement and states have their own sets of regulations. Packaging must be approved by the BIS, and this requirement encompasses most items. Quarantine requirements apply to items such as food and raw cotton, and are reportedly costly and complicated by a lack of quarantine facilities for road and rail consignments, thereby causing delays. Certification requirements can be fulfilled by various bodies such as the BIS, certain Indian authorities, SAFTA, SAARC and other certifying firms abroad. The primary issue associated with this requirement is frequent delays that can last for months. Testing requirements generally take up to a few weeks to fulfil, though the fact that testing facilities are located far away in Delhi and Mumbai end up making the process difficult.

The PSQCA signed a Memorandum of Understanding (MOU) with the BIS in September 2012 to extend its ability to certify Pakistani exports to India. However, the PSQCA reportedly lacks accreditation by international laboratories of the testing facilities mentioned in the MOU, rendering the efficacy of this agreement moot. Moreover, there seems to have been no movement on this issue following the signing of the MOU three years ago. This is a worrying level of neglect given the looming prospect of NDMA, especially since at the time of the signing of the MOU Pakistan’s inability to capitalize on such an agreement given the absence of the necessary facilities was known and reported in the press.24

Both sides have failed to provide facilities for SPS checking at the border, though Pakistan simply does not implement standards as comprehensively or stringently as India, and therefore Indian products, while probably held up by inefficient custom procedures, are not subjected to extensive, time-consuming testing on their way to Pakistan.

Custom procedures are reported as being prohibitively cumbersome at times, with a lack of tracking and tracing facilities and low quality logistic services. This is an issue for both sides, though India’s more stringent procedures mean that any inefficiency is magnified, whereas Pakistan’s relatively lax standards likely translates to lower NTBs arising during this part of the process.

It is also important to note that since NDMA will open the floodgates to many Indian products, Pakistan’s inadequate testing facilities will come under renewed strain. Goods of questionable quality will most likely enter the market in much higher numbers. The pharmaceutical sector in Pakistan, for instance, has expressed reservations about NDMA since it is thought that Indian pharmaceutical products of dubious quality will gain access to the Pakistani market due to a lack of proper testing facilities.

24PSQCA: lack of accredited facilities may hinder exports to India (2012 October 4). The Business Recorder. Retrieved from http://www.brecorder.com/.

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Raising concerns about India’s NTBs does not amount to pointing fingers at India- an equally intractable problem is Pakistan’s own lack of resources when it comes to quality testing. However, the fact remains that given India’s current technical barriers to trade and Pakistan’s ill-equipped PSQCA, Pakistani exports to India will be at a serious disadvantage even after the removal of certain high-potential items from India’s sensitive list. In other words, Pakistan’s products will face serious resistance on their way to penetrating the Indian market, significantly limiting any benefits Pakistan can hope to claim from free trade with India. On the other hand, Indian imports to Pakistan will face little resistance and may not be inspected properly. Therefore granting NDMA to India does not seem feasible until progress is made on this issue.25

3.1.3 PARA-TARIFFS

India levies high para-tariffs on its imports in addition to the basic customs duty. The para-tariffs consist of countervailing duty, education cess and secondary and higher education cess. The cumulative effect of these duties and cess rates is significantly greater on imported products as compared to the effect on local products, putting imports at a serious disadvantage. It should be noted that education cess is applied only on selected products.

India’s Tariff Protection Tariff on imported goods On local producer

Basic Duty 5 0

CVD- Add. Duty/Excise 12 12

(12% of basic duty) 12.60% 12.60%

Education Cess 2 2

(2% of basic duty + CVD) 0.35% 0.24%

SAH Education Cess 1 1

(1% of basic duty + CVD) 0.18% 0.12%

Special CVD 4 0

(4% of basic+CVD+Edu+SAH) 4.73% 0.00%

Para-Tariff 18% 12%

Total Duty 23% 12%

Difference b/w local producer and exporter

=11%

While these para-tariffs are not applied on Pakistani products in a discriminatory fashion, they still pose a significant impediment to imports, especially in areas where Pakistan is going up against countries that already have an established presence in the Indian market. On the other hand, Pakistan’s para-tariffs are lower on average.

Pakistan’s Tariff Protection Tariff on imported goods On local producer

Basic Customs Duty 5.00% 0.00%

Sales Tax 17% 17%

Total Duty 22% 17%

Difference b/w local producer and exporter

=5%

Since Pakistan’s General Sales Tax (GST), which represents the largest portion of Pakistani para-tairffs, is exempt for imports of food, raw materials and capital goods, some Pakistani products

25This portion of this report relies heavily on information found in Pasha and Imran (2012), which contains an in-depth and insightful discussion of NTBs faced by both sides in the Pakistan-India trade relationship.

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have a 5% advantage over imports where others have none, whereas local producers in India have a leeway by a margin of at least 10%. Therefore, India’s para-tariffs restrict access to its market to a much larger extent than do Pakistan’s, once again putting the weaker country at a disadvantage in the trading relationship.

3.1.4 VISAS

India imposes a restrictive visa regime on Pakistani applicants, with particularly cumbersome requirements imposed on applicants who are businessmen. The visa policy on both sides is a result of the countries’ long history of political conflict and continuing lack of trust. In the absence of a more liberal visa regime the development of business relations faces a serious impediment as interaction between the two business communities, vital for the facilitation of trade, remains limited.26

Pakistani applicants for the business visa must first obtain a sponsor certificate from an India sponsor, who must in turn have the certificate attested by a government official. Indian sponsors are reportedly hesitant to issue the necessary letter, and the process as a whole can be time-consuming.

Visa approval regularly takes four to eight weeks, though in certain cases it has taken up to three months. This is a major deterrent to doing trade since businessmen on the Indian side cannot be assured that the traders on the Pakistani side will be able to send representatives or technical personnel etc. promptly in case of any complaints or issues with products. This is a particularly important issue where machinery exports are concerned. Pakistanis are also required to report to the police on arrival and before departing, thereby creating an atmosphere of suspicion and harassment.

A visa agreement signed in 2012 between the two countries promised to give businessmen who have an annual income of at least Rs. 0.5 million one year visas for five cities with up to four entries, and a one year visa for 10 cities with exemption from police reporting to businessmen with an annual income of at least Rs. 5 million. While this is a step in the right direction, the ground reality does not reflect these changes. Multiple entry visa applications are now accepted but businessmen continue to face serious difficulties in actually obtaining such visas to India.

A business visa holder from Pakistan cannot remain in India for more than 30 continuous days on any one visit and still faces a limit on the number of cities he or she can visit. Police reporting is still required for businessmen below the afore-mentioned income threshold. These are not features of India’s visa regimes for other countries such as Sri Lanka and China. Therefore Pakistani businessmen are at a serious disadvantage with respect to trade with India since interacting with their Indian counterparts is made difficult by visa policy.

One of the major issues echoed by analysts and stakeholders on the subject of Pak-India trade is the lack of constructive and consistent communication between the two countries. A liberal visa policy would be the first step towards tackling this problem. Yet the fact that fundamental issues to do with the visa regime remain unaddressed in spite of all the recent overtures towards liberalizing trade casts doubt on the prudence of either side’s long-term planning. There is little hope of Pakistan and India building stronger trade ties without facing serious short-term hurdles as long as issues such as the visa regime and technical barriers to trade remain largely unresolved. If Pakistan is to further open up its markets to a giant like India, India must reciprocate by taking the initiative and truly easing its visa policies first.

26Taneja, N (2013). Normalizing Pakistan India trade p. 20-23.Retrieved from http://www.icrier.org/.

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27Pakistan, India may allow bank branches (2014 Jan 17). Dawn. Retrieved from http://www.dawn.com/.

3.1.5 BANKING

Letters of credit, against which consignments are dispatched, are issued by banks and are regularly rejected by the other country’s banks. The lack of acceptance of letters of credit is a major stumbling block for Pakistan-India trade. It forces traders to rely on contracts offered by banks without the explicit guarantee of payment. As a result, trade as it stands between India and Pakistan is rife with payment-based delays, defaults and poor dispute resolution. Businessmen in both countries have suggested allowing banks to open branches in the trading country. In August 2012 there was an agreement to issue a banking license to two banks from each country. From the Indian side the State Bank of India and the Bank of India were to be granted permission to operate in Pakistan, and from the Pakistani side the National Bank of Pakistan and United Bank were to be given reciprocal permission. However, there seems to have been little movement on the issue in the three years since the agreement was made.27

Non-tariff barriers such as issues involving banking and the visa regime are likely to have a disproportionately negative effect on the more resource-poor country in a trade relationship. Therefore, Pakistan stands to suffer greater set-backs due to these problems than does India once trade restrictions are eased, since it is in a weaker position, both in terms of its economy and government institutions. A decisive resolution to these issues may elude both countries for a long time to come, but granting NDMA status to India does not seem advisable until at least some substantive progress is made on these issues. So far growing vociferousness on the topic of trade liberalization has not been accompanied by a concomitant renewal of initiative when it comes to solving problems and levelling the playing field between the two unequal trade partners. Yet it is just such a change in attitude that is required to ease Pakistan’s transition to the NDMA agreement with India.

3.1.6 NOTE ON “NON-DISCRIMINATORY” NATURE OF NTBs

Discussions about Pakistan granting India NDMA often include the claim that India’s NTBs are non-discriminatory and do not put Pakistan at any special disadvantage relative to India’s other trade partners. However, even a cursory knowledge of Pakistan-India trade suggests that this is not entirely true. Pakistan and India’s fraught relationship means that the NTBs imposed by both sides are coloured by their contentious relations. The visa regimes both countries impose on one another are more restrictive than those they impose on other countries. Issues to do with banking are also unique to Pakistan-India relations. Businessmen on both sides of the border complain about unfair treatment at the hands of the other’s trade authorities, and these complaints are lent credence by the ingrained mistrust which results from historically volatile relations between the two countries. There is also an oft-cited need for effective trade dispute resolution mechanisms which has so far gone unfulfilled.

All of this amounts to barriers to trade that are particularly intractable in the case of Pakistan and India. While both sides suffer, Pakistan, being the smaller economy and having deficient government resources, suffers more. Improving the situation and removing certain NTBs is undoubtedly a two-way street. The lack of progress on this front clearly spells disaster for Pakistan if trade is normalized at this point, as it will remain hobbled by these discriminatory NTBs even as India is able to overcome them to a much greater extent and capture the Pakistani market.

It is true that granting India NDMA status is a necessary move if the trust deficit between the two countries is to be removed and normalization of trade relations commenced. However,

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NDMA will only have this impact if India takes measures to ease its NTBs in Pakistan’s case as a gesture of good faith. Otherwise, NDMA may actually end in more problems for the India-Pakistan trade relationship as artificially competitive Indian goods wipe out local Pakistani industries and Pakistani exports to India falter in the face of ironclad NTBs. In other words, the scales must be made more even before NDMA is granted lest they tip even further in India’s favour post-NDMA.

As suggested by the PBC’s 2013 report on Pakistan-India trade normalization, one way to do this would be to agree upon a mechanism (administered by a joint India-Pakistan trade council) whereby NTBs could be recognized by both countries and concrete objectives subsequently set for their removal.

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4.0 PURPORTED BENEFITS OF INDIA REDUCING ITS SENSITIVE LIST IN RETURN FOR NDMA

In March 2014 it was reported that Pakistan was on the verge of granting India NDMA (Non-Discriminatory Market Access, another name for MFN status) after India agreed to exclude 160 items, most of them textile products, from its Pakistan-specific sensitive list under SAARC, and eventually cut the list down to 100 items. This has been touted as one of the major benefits of giving India NDMA status- in return Pakistan will gain tariff concessions on a number of textile items.

However, given the concerns that have been raised regarding the granting of NDMA, a closer look at the potential benefit of this increased market access seems to be in order since it is this potential benefit that is often cited as one of the primary arguments for giving India NDMA.

India has signed FTAs with SAARC countries Sri Lanka, Nepal and Bhutan. Bangladesh faces the LDC (Least Developed Country) sensitive list, which contains only 25 items (including no textile items), as opposed to the NLDC (Non-Least Developed Country) list which contains 614 items and applies to Pakistan and Sri Lanka. India’s trade with Sri Lanka, Nepal and Bhutan is governed in large part by their FTAs rather than SAFTA’s terms.

India’s trade with Sri Lanka and Bangladesh has grown much more significantly than its trade with Pakistan over the last few years, and this section will argue that the concessions India has offered in return for NDMA will do little to help Pakistan play catch up, since most of the terms that have allowed Sri Lanka and Bangladesh to maintain an advantage over Pakistan in the Indian market will remain in place post-NDMA.

The Least Developed Countries in SAARC, which include Bangladesh, Nepal and Bhutan, face significantly deeper tariff concessions on items not on the sensitive list than do the Non-Least Developing Countries, which include Pakistan and Sri Lanka. However, Sri Lanka’s trade with India falls under its FTA, which leaves Pakistan facing the highest tariffs under SAFTA. Moreover, while Sri Lanka faces the longer NLDC sensitive list, 247 of the 614 items on it are zero-rated as per its FTA with India. Items not included in India’s FTAs with Sri Lanka, Nepal and Bhutan are still exportable for the countries at more favourable tariff rates than those applicable to Pakistan. The same is true for Bangladesh, an LDC- it gets higher concessions on most items than Pakistan and faces a much smaller sensitive list. India’s pruning of the sensitive list in return for NDMA status will therefore not put Pakistan on an equal footing with other SAFTA countries

0

100

200

300

400

500

600

700

800

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Indian Imports

Sri Lanka's Exports to India

Bangladesh's Exports to India

Pakistan's Exports to India

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as far as non-sensitive list items are concerned. Moreover, there is no firm commitment on exactly which items will be removed from the sensitive list and whether the lowered tariffs on them for Pakistan will be consistent with those applied to other countries.

The India-Sri Lanka FTA was signed in 2000 and offered immediate full concession on 1351 items and full concession on a further 2870 items by 2003. Therefore it enjoys zero tariffs on most items, whereas Pakistan faces NLDC tariffs on all non-sensitive list items.28

Tariff Liberalization under India-Sri Lanka FTA

Tariff reductions India’s concessions to

Sri Lanka

Negative List/ Sensitive List 1,220

Immediate Zero Duty (March 2000) 1,351

ZeroDutywithinthreeyears(cutsof50%,75%and100%byMarch2003) 2,870

A closer look reveals that Pakistani export items under the high potential HS codes of agricultural, plastic and textile products etc. face tariffs that are consistently higher than tariffs faced by the other members of SAARC. Notification No. 67/2006 issued by the Indian government lays out the initial structure of the SAFTA concessions- certain items for both LDCs and NLDCs receive concessions under SAFTA, with NLDCs receiving fewer and lower concessions than LDCs, whereas other items do not receive concessions for either category of country (the no concession lists for both NLDCs and LDCs contained several high potential items, though the NLDC list was longer). Furthermore, not all countries within the same category face exactly the same tariffs from India. Notifications subsequent to No. 67/2006 have amended the specifics of SAFTA terms (most notably No. 133/2010, which significantly deepened concessions on the concession items listed in No.67/2006, with NLDCs facing tariffs on said items ranging between 5% and 11% and LDCs facing zero tariffs on the same), and so the initial structuring of concessions has gradually changed as more items on India’s old sensitive lists from No.67/2006 now receive some level of concession from India. NLDCs still face higher tariffs and fewer concessions than do LDCs.

Plastics

The initial list of no-concession plastic items was more or less identical for NLDCs and LDCs, with all 6-digit HS codes from HS 391510 to HS 392690 placed on the list. The remaining HS 39 items received concessions for both NLDCs and LDCs, with LDCs enjoying higher concessions. Subsequent amendments to the terms have deepened concessions for both Pakistan and the LDCs, though the LDCs have a very marked competitive edge in nearly all plastics items in terms of imports to India. It should be noted, for instance, that a 2011 amendment to Notification No. 107/2008 gave full concession to Bangladesh for nearly all of the original sensitive list plastic items. Bhutan and Nepal also enjoy full concession on nearly all of these items. Furthermore, Notification No. 133/2010 increased the level of concessions on the items that initially received SAFTA concessions in 2006, with Pakistan facing between 5% and 11% on these items and LDCs facing zero tariffs on the same. NLDCs including Pakistan have received further concessions on the initial concession items since the 2010 notification, but the high potential HS codes 391510 to 392690 remain on the NLDC sensitive list and continue to face tariffs of around 10% as compared to zero tariffs for the LDCs on the same items. The rest of the plastic HS codes face higher tariff rates for Pakistan than for the LDCs and Sri Lanka as well. There is no commitment from India to change this once Pakistan grants NDMA.

28Table from PBC’s 2013 report “Pakistan India trade and a viable roadmap for trade liberalization”.

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29Copies of all notifications referenced in this section are available at http://www.cbec.gov.in/.

Textiles

Much attention has been paid in particular to the prospect of India removing textile items from its sensitive list (revised from its initial form in Notification No. 67/2006), thereby improving Pakistan’s access to its textile market. These sensitive list textile items already face low or zero duties for Nepal, Sri Lanka, Bhutan and Bangladesh. Notification No. 51/2008, for instance, granted Bangladesh full concession on 164 out of 187 high potential HS 61 and 62 items that were initially given no concessions under SAFTA. Pakistan’s trade potential calculated at the 6 -digit level within the 182 textile products and cotton on the sensitive list (comprised of HS codes 52, 54, 55, 57, 58, 59, 60, 61, 62, 63) amounts to around USD 550 million. It should further be kept in mind that not all these items will necessarily be exempted-no explicit commitment has been made to removing all textile items from the list. Moreover this is a small figure in comparison to the potential for exports India would be able to realize in the wake of NDMA status. Even with the items off the sensitive list, Pakistan would have to contend with the afore-mentioned NTBs when exporting the products. There would also be competition from countries such as Bangladesh that have faced low to zero tariffs on the same items for years and have captured significant portions of the market (Bangladesh reports USD 120 million of exports to India within these items). These considerations throw doubt on the extent of benefits Pakistan can expect to reap from the shortening of India’s NLDC sensitive list.

Agriculture

Some high potential agricultural items remain on India’s NLDC sensitive list and no commitment has yet been given on the removal of these from the list following the granting of NDMA. For instance, HS 70310 and HS 71220 (onions) are still on the sensitive list and have over USD 600 million worth of trade potential to India at the 6-digit level. Pakistan also faces significantly higher tariffs on non-sensitive list items than do the LDCs. This will continue to be the case following NDMA.

This brief overview suggests that a reduction in the NLDC sensitive list will not bring Pakistan major benefits, as it will continue to face relatively high tariffs on the vast majority of high potential imports to India. Therefore, it is doubtful that NDMA can be justified by citing the advantages a pruning of the NLDC sensitive list will bring, especially in light of the risks it entails.29

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5.0 BRIEF OVERVIEW OF INDIA’S 2015 FOREIGN TRADE POLICY AND MEIS

India’s Foreign Trade Policy for 2015 is aggressively geared towards incentivizing Indian exports and features strengthened and simplified schemes that directly and indirectly subsidize and lend support to export commodities. In addition to direct and indirect subsidies to export products several measures are to be undertaken to streamline the export process and reduce transaction costs. The most notable initiative is a new export subsidy scheme- Merchandise Exports from India Scheme (MEIS).

The objective of MEIS is to offset costs resulting from infrastructural inefficiencies involved in the export of Indian goods, with particular emphasis paid to those commodities which have high export intensity and employment potential. MEIS consolidates five different schemes from the former trade policy which each had different kinds of duty scrips30 with varying conditions. Under the MEIS scheme however, no conditionality is attached to the scrips, which are essentially rebates on purchase of inputs for manufactured goods, thereby greatly enhancing the ease with which its benefits can be availed.31 Exporters with good track records are designated as Status Holders and are eligible for various regulatory exceptions and administrative advantages such as the right to self-certify the origin of their goods. The basis of calculation of the reward will be on realized FOB value of exports in free foreign exchange, or on the FOB value of exports as given in the Shipping Bills in free foreign exchange, whichever is less unless otherwise specified.

MEIS is applicable on nearly 5000 items at the 8-digit HS code, out of which the subsidies apply to Pakistan for 1005 items given its Category C country status.

The MEIS scheme has a counterpart services scheme called SEIS. Other export support schemes in India’s 2015 Foreign Trade Policy include the Niryat Bandhu Hand holding scheme (which offers training to new and potential exporters), Towns of Export Excellence (towns exporting above a certain threshold receive additional support), Duty Exemption Schemes (allows duty free import of inputs), and Export Promotions Capital Good Scheme (facilitates imports of capital goods to improve export competitiveness).

5.1 MEIS ANALYSIS

In this section we will attempt to identify products within which India has high potential for exports to Pakistan that have been granted subsidies under MEIS. It is imperative that such items be rigorously identified using comprehensive data in order to help determine where countervailing duties need to be imposed. The bulk of this analysis was performed at the 6 -digit HS code level due to the unavailability of Pakistani data at the 8-digit level.32 This is not ideal since MEIS awards are imposed at the 8-digit level, and the 8-digit level allows for a greater degree of accuracy in analysing trade figures. It should be kept in mind that India and Pakistan’s 8-digit codes are not completely harmonized which would complicate such analysis. Items for which Pakistan’s 8-digit data was available for 2013 have also been considered in this

30Duty free scrips are paper authorisations that allow the holder to domestically procure or import inputs or machinery required for manufacturing products that are exported without paying duties/taxes equivalent to the scrip value. So if a duty scrip is worth Rs 50,000, the holder can use it to import the relevant good without paying duties/taxes up to Rs. 50,000.31The scrips can be used for the following requirements:(i) Payment of Customs Duties for import of inputs or goods, except items listed in Appendix 3A.(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per DoR notification.(iii) Payment of service tax on procurement of services as per DoR notification.(iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.32No 8-digit data for Pakistani trade was available for 2014 at the time of the writing of this report, and Pakistan’s 8-digit data for previous years was patchy and incomplete.

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section. Averages of MEIS subsidy values are taken for the 6-digit level products. Complete 2013 data (Pakistan has reported no 8-digit data for 2014) was available at the 8-digit level for a total of 274 items out of the 1005 items that will receive MEIS benefits.

TOP 50 HIGH POTENTIAL INDIAN EXPORTS TO PAKISTAN WITH MEIS SUBSIDY AT 6-DIGIT HS CODE LEVEL

While MEIS applies to 1005 items at the 8-digit HS code level where Indian exports to Pakistan are concerned, at the less specific 6-digit level this collapses into a total of 485 items. The total trade potential at the 6-digit level for Indian exports to Pakistan for the 485 items comes out to USD 1.4 billion. The following table lists the fifty 6-digit level items with the highest trade potential. In other words, these items are exported to the world in large quantities by India and imported from the world in large quantities by Pakistan, and therefore it is these items that stand to gain the most from MEIS subsidies. Collectively these fifty items represent USD 1.1 billion of trade potential. MEIS reward values marked by asterisks indicate that not all the 8-digit items within the 6-digit code face the same MEIS reward.

USD Millions TOP 50 HIGH POTENTIAL INDIAN EXPORTS WITH MEIS SUBSIDY

HS Code

Product LabelMEIS

Reward

Pak 2014 Imports

from India

Pakistan 2014

World Imports

India 2014

World Exports

Trade Potential

090240Black tea (fermented) & partly fermented tea in packages exceedg 3 kg

3.86* 24 319 588 295

230400Soya-bean oil-cake&oth solid residues,whether or not ground or pellet

5 194 479 1,172 285

210690 Food preparations nes 3 1 71 170 70

230990 Animal feed preparations nes 3 0 50 165 50

950300Tricycles, scooters, pedal cars and similar wheeled toys; dolls'' carr

5 0 37 40 37

190110Prep of cereals,flour,starch/milk f infant use,put up f retail sale

5 0 68 34 34

91011 Ginger : Neither crushed nor ground 3 13 48 41 28

330290Mixtures of odoriferous subst f use as raw materials in industry,nes

4 11 38 186 27

330210Mixtures of odoriferous substances for the food or drink industries

3 2 28 36 26

140490 Vegetable products nes 4.333* 2 26 29 24

190190Malt extract&food prep of Ch 19 <50% cocoa&hd 0401 to 0404 < 10% cocoa

5 3 21 83 18

530310Jute and other textile bast fibres, raw or retted

5 0 39 17 17

090411Pepper of the genus Piper,ex cubeb pepper,neither crushd nor ground

3.29* 0 15 117 15

081090 Fruits, fresh nes 5 0 10 71 10

560500Metallisd yarn,beg textile yarn combind w metal thread,strip/powder

5 2 17 12 10

300390Medicaments nes, formulated, in bulk

3 0 10 265 10

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TOP 50 HIGH POTENTIAL INDIAN EXPORTS WITH MEIS SUBSIDY

HS Code

Product LabelMEIS

Reward

Pak 2014 Imports

from India

Pakistan 2014

World Imports

India 2014

World Exports

Trade Potential

090220Green tea (not fermented) in packages exceeding 3 kg

4* 0 9 11 9

080280 Areca nuts 3 0 91 8 8

90831Cardamoms : Neither crushed nor ground

3 2 9 58 7

950691Gymnasium or athletics articles and equipment

5 0 7 8 7

170490Sugar confectionery nes (includg white chocolate),not containg cocoa

3 0 6 81 6

080111 Coconuts, dessicated 5 0 11 6 6

570490Carpets of felt of textile materials, nes

5 0 6 68 6

080810 Apples, fresh 5 0 7 6 6

121190Plants &pts of plants(incl sed&fruit) usd in pharm,perf,insect etc nes

5 5 11 240 6

030339Flatfish nes, frozen, excluding heading No 03.04, livers and roes

5 0 11 5 5

81340 Fruits, dried nes 5 1 6 12 5

170290 Sugar nes, including invert sugar 5 0 7 5 5

950699Articles&equip for sports&outdoor games nes&swimmg&paddlg pools

5 1 5 107 4

090921Seeds of coriander : Neither crushed nor ground

3 1 5 56 4

210111Coffee extracts, essences, concentrates

5 0 4 283 4

290611 Menthol 3 0 4 213 4

570330Carpets of other man-made textile materials, tufted

5 0 4 89 4

110510 Potato flour and meal 5 0 4 10 4

711719Imitation jewellery nes of base metal whether o not platd w prec metal

5 1 4 114 4

590700Textile fab impreg,ctd,cov nes;paintd canvas (e.g.threatrical scenery)

5 0 4 3 3

080119 Coconuts, excluding dessicated 5 0 3 58 3

030499Frozen fish meat whether or not minced (excl. swordfish, toothfis

5 0 3 126 3

200410Potatoes prepard or preservd oth than by vinegar or acetic acid,frozen

5 2 5 5 3

090710Cloves, whole fruit, cloves and stems, neither crushed nor ground

3 0 3 5 3

570242Carpets of man-made textile mat,of woven pile construction,made up,nes

5 0 3 86 3

330119 Essential oils of citrus fruits, nes 3 0 3 6 3

130219 Vegetable saps and extracts nes 3 0 3 262 3

070320 Garlic, fresh or chilled 3 5 45 8 3

420229Handbags, of vulcanised fibre or of paperboard

5 0 3 13 3

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TOP 50 HIGH POTENTIAL INDIAN EXPORTS WITH MEIS SUBSIDY

HS Code

Product LabelMEIS

Reward

Pak 2014 Imports

from India

Pakistan 2014

World Imports

India 2014

World Exports

Trade Potential

190590Communion wafers,empty cachets f pharm use&sim prod&bakers' wares nes

5 0 3 109 3

940350 Bedroom furniture, wooden, nes 5 0 3 4 3

630790Made up articles, of textile materials, nes, including dress patterns

5 0 3 339 3

570110Carpets of wool or fine animal hair, knotted

5 0 3 249 3

180690Chocolate and other food preparations containing cocoa nes

3 0 3 74 2

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5.2 MEIS HIGH POTENTIAL PRODUCTS AT 6-DIGIT AND 8-DIGIT HS CODE LEVEL

This section considers the top 6-digit HS code level items in greater detail, offering information about the product’s import and export trends as well as identifying the 8-digit products under it that are to receive MEIS benefits. At the 8-digit level no data is available for Pakistan’s imports from the world for the year 2014. The 6-digit level data provided in all cases is for the year 2014, whereas the 8-digit data in all cases is for the year 2013 since Pakistan’s world import numbers are available at this level for certain products, allowing calculation of 2013 trade potential for those products at the more accurate 8-digit level.

5.2.1 BLACK TEA

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

090240Black tea (fermented) & partly fermented tea in packages exceedg 3 kg

3.86 319 588 24 295

HS 090240 has a trade potential of USD 295 million and enjoys an average MEIS reward of 3.86% on FOB value. The graph shows that both exports and imports of the product by India and Pakistan respectively have seen net growth during the period 2004-2014. There are 7 HS 090240 items in the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013

World Exports

Pak 2013 Imports

from India

Trade Potential

09024010 Tea Black In Pckt>3Kg But<= 20 Kg 5 216 3,334 0 190

09024020 Tea Black,Leaf In Bulk 3 _ 409,819 19,717 _

09024030 Tea Black,Dust In Bulk 3 _ 36,551 1,208 _

09024040 Tea Bags 5 _ 63,305 2 _

09024050 Tea Black (E.G Ball,Bricks,Tblts,Etc) 5 _ 5 0 _

09024060 Tea Black Waste 3 _ 954 0 _

09024090 Other Black Tea 3 340,779 63,882 1,678 82,873

0

100

200

300

400

500

600

700

800

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Black Tea (HS 090240)

Pak Imports from India

India World Exports

Pakistan World Imports

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Soya Bean (HS 230400)

Pak Imports from India

India World Exports

Pakistan World Imports

5.2.2 SOYA BEAN PRODUCTS

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

230400Soya-bean oil-cake&oth solid residues,whether or not ground or pellet

5 479 1,172 194 285

HS 230400 has a trade potential of USD 285 million and faces average MEIS rewards of 5%. India exported upwards of USD 1 billion of HS 230400 in 2014, while Pakistan’s imports of the product have been steadily rising since 2004. It enjoys an average MEIS reward of 5% on FOB value. There are 4 HS 230400 items in the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

23040010 Oil cake and oil cake meal of soyabean 5 _ 61,504 152

23040020 Oil cake of soyabean, solvent extracted 5 _ 35,006 0

23040030 Meal of soyabean, solvent extracted (defatted) 5 _ 974,802 185,278

23040090 Other 5 _ 109,412 1,430

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5.2.3 FOOD PREPARATIONS

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

210690 Food preparations nes 3 71 170 1 70

HS 210690 has a trade potential of USD 70 million and enjoys an average MEIS reward of 3% on FOB value. India reported USD 170 million worth of HS 210690 exports in 2014 whereas Pakistan had sizeable imports worth USD 71 million of the same. Both exports and imports by the respective countries have shown steady growth since 2004. There are 11 HS 210690 items on the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013

World Exports

Pak 2013 Imports

from India

Trade Potential

21069011 Soft Drink -Sharbat 3 _ 983 0 _

21069019 Soft Drink - Other Than Sharbat 3 _ 22921 60 _

21069020 Syrups and squashes 3 355 7362 20 335

21069040Sugr-Syrp Contng Flavrng/Colrng Mtrl Nes

3 3931 2144 0 3931

21069050Compnd Prpns For Mkng Bevergs(Non-Alcohlc)

3 _ 258 32 _

21069060 Food Flavouring Material 3 2 1893 0 2

21069070 Churna For Pan 3 _ 178 0 _

21069080 Custard Powder 3 _ 303 0 _

21069091 Other Diabetic Foods 3 _ 1100 0 _

21069092Other Sterilised Or Pasturised Millstone

3 _ 401 0 _

21069099 Other Food Preparation Nes 3 _ 118091 470 _

0

20

40

60

80

100

120

140

160

180

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Food Preparations (HS 210690)

Pak Imports from India

India World Exports

Pakistan World Imports

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0

5

10

15

20

25

30

35

40

45

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Tricycyles, scooters etc (HS 950300)

Pak Imports from India

India World Exports

Pakistan World Imports

5.2.4 TOYS

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

950300Tricycles, scooters, pedal cars and similar wheeled toys; dolls'' carr

5 50 165 0 50

HS 950300 exhibits trade potential of USD 37 million and faces an average MEIS reward of 5%. Exports of the item by India and imports of the item by Pakistan have grown to similar values over the period considered.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013

World Exports

Pak 2013 Imports

from India

Trade Potential

95030010 Dolls Of Wood 5 1926 1252 0 1926

95030090 Other 5 27269 23302 0 23302

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5.2.5 CEREAL PREPARATIONS

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

Trade Potential

190110

Prep of cereals,flour,starch/milk f infant use,put up f retail sale

5 68 34 0 34 68

HS 190110 shows a trade potential of USD 34 million and enjoys an average MEIS reward of 5% on FOB value. Pakistan reports greater imports of this item than India’s world exports, but both have shown growth since 2004. There are 2 HS 190110 items in the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

19011010 Malted Milk (Including Powder) 5 _ 2771 245

19011090 Other Food Prpns Fr Infnt Use Excl Malted Milk 5 _ 31553 135

0

10

20

30

40

50

60

70

80

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Prep of cereals (HS190110)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.6 GINGER

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

091011 Ginger : Neither crushed nor ground 3 48 41 13 28

HS 091011 has a trade potential worth USD 28 million and faces a MEIS benefit of 3% on FOB value. Exports and imports of the product by India and Pakistan respectively witnessed a sharp rise after 2010, as did Indian imports of the item to Pakistan. There are 4 HS 091011 items in the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2014

World Imports

India 2014 World

Exports

Pak 2014 Imports

from India

9101110 Fresh 3 _ 9423 2119

9101120 Dried, Unbleached 3 _ 6766 0

9101130 Dried, Bleached 3 _ 5887 65

9101190Other Ginger; Neither Crushed Nor Ground

3 _ 17986 8776

0

10

20

30

40

50

60

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Ginger (HS 091011)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.7 MIXTURES OF ODORIFEROUS SUBSTANCES (RAW MATERIALS)

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

330290Mixtures of odoriferous subst f use as raw materials in industry,nes

3.67* 38 186 11 27

HS 330290 has trade potential of USD 27 million and enjoys an average MEIS benefit of 3.67%. India is a major exporter of the item, reporting USD 186 million worth of exports in 2014, and Pakistan has seen a rise in imports of the product over the past few years, reporting 2014 imports of USD 38 million.

USD Thousands

HS Code Product Label MEISPak 2014

World Imports

India 2014 World

Exports

Pak 2014 Imports

from India

33029012 Synthetic Essential Oils 3 _ 2504 26

33029019Other Mxtr Of Aromatic Chemicals Andessn Oil

3 _ 13846 27

33029020 Aleuritic Acid 5 _ 10190 0

0

50

100

150

200

250

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Mixtrues of odoriferous substances for use as raw materials (HS 330290)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.8 MIXTURES OF ODORIFEROUS SUBSTANCES (FOOD, DRINK)

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

330210Mixtures of odoriferous substances for the food or drink industries

3 28 36 2 26

HS 330210 exhibits a trade potential of USD 26 million and faces an MEIS reward of 3%. Both exports and imports of the product by India and Pakistan respectively have risen steadily over the past decade. There is one HS 330210 item in the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013

World Exports

Pak 2013 Imports

from India

Trade Potential

33021090 Other flavors for drink indust 3 15946 12695 134 12561

0

50

100

150

200

250

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Mixtrues of odoriferous substances for use as raw materials (HS 330290)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.9 MALT

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

190190Malt extract&food prep of Ch 19 <50% cocoa&hd 0401 to 0404 < 10% cocoa

5 21 83 3 18

HS 190190 shows a trade potential of USD 18 million and an average MEIS reward of 5% on FOB value. Pakistan imports of the item have fluctuated over the past decade but have shown net growth whereas India’s exports grew steadily until 2012 after which they took a slight dip. There are 2 HS 190190 items on the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013 World

Exports

Pak 2013 Imports

from India

19019010 Malt extract 5 1336 10667 465

19019090 Other food preparations 5 18210 75562 3253

0102030405060708090

100

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Malt Extract (HS 190190)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.10 JUTE

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

530310Jute and other textile bast fibres, raw or retted

5 39 17 0 17

HS 530310 has a trade potential of USD 17 million and faces an average MEIS reward of 5%. Pakistan’s imports of the item grew to around USD 70 million in 2011 before dropping to USD 40 million in 2014, whereas India reported exports of USD 17 million in 2014. There is one HS 530310 item on the MEIS list.

USD Thousands

HS Code Product LabelMEIS

Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

53031010 Jute, Raw Or Retted 5 6537 19546 435 6102

0

10

20

30

40

50

60

70

80

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Jute (HS 530310)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.11 PEPPER

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

090411Pepper of the genus Piper,ex cubeb pepper, neither crushd nor ground

3.29* 15 117 0 15

HS 090411 showsa trade potential of USD 15 million and faces an average MEIS reward of 3.29%. Pakistan has reported steady imports of around USD 15 million over the past decade whereas Indian exports of the product have shown net growth, reaching USD 117 million in 2014. There are 7 HS 090411 items on the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013 World

Exports

Pak 2013 Imports

from India

Trade Potential

9041110 Pepper Long 5 10340 1332 39 1293

9041120 Light Black Pepper 3 255 734 0 255

9041140 Black Pepper Ungarbled 3 _ 4279 129 _

9041150 Dehydrated Green Pepper 3 _ 9887 0 _

9041160 Pepper Pinheads 3 _ 1984 0 _

9041170 Freez Dried Green Pepper 3 _ 2023 0 _

9041180 Frozen Pepper 3 _ 83 0 _

0

20

40

60

80

100

120

140

160

2004 2006 2008 2010 2012 2014

USD

Mill

ions

Pepper (HS 090411)

Pak Imports from India

India World Exports

Pakistan World Imports

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5.2.12 TOMATOES

USD Millions

HS Code

Product LabelAverage

MEIS Reward

Pakistan 2014

World Imports

India 2014

World Exports

Pak 2014 Imports

from India

Trade Potential

070200 Tomatoes, fresh or chilled 3 131 145 124 7

HS 070200 shows trade potential of USD 16 million and enjoys a MEIS reward of 3%. India has been Pakistan’s major source of tomato imports for the past few years, with Indian imports of the vegetable to Pakistan rising above USD 120 million in 2013. It should be noted that the Pakistan world imports and Indian imports numbers are inconsistent between 2005 and 2008. There is one HS 070200 item on the MEIS list.

USD Thousands

HS Code Product Label MEISPak 2013

World Imports

India 2013 World

Exports

Pak 2013 Imports

from India

Trade Potential

7020000 Tomatoes Fresh Or Chilled 3 131356 144991 124162 7194

0

20

40

60

80

100

120

140

160

2005 2007 2009 2011 2013

USD

Mill

ions

Tomatoes (HS 070200)

Pak Imports from India

Pakistan World Imports

Indian World Exports

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5.2.13 TEXTILE ITEMS

The MEIS scheme offers subsidies on 176 textile items at the 8-digit level in HS Codes 50 to 65. At the 6-digit level these collapse into 70 items with a collective trade potential of USD 76 million. Listed below are the ten 6-digit items with the highest trade potential that will receive rewards under MEIS. All textile items at the 8-digit level face an MEIS reward of 5% on FOB value.

USD Millions

HS Code

Product LabelMEIS

Reward

Pakistan2014

Worlds Imports

India2014

Worlds Exports

Pak2014

Imports from India

Trade Potential

530310Jute and other textile bast fibres, raw or retted

5 39 17 0 17

500790 Woven fabrics of silk, nes 5 20 11 0 11

560500Metallisd yarn,beg textile yarn combind w metal thread,strip/powder

5 17 12 2 10

570490Carpets of felt of textile materials, nes

5 6 68 0 6

570330Carpets of other man-made textile materials, tufted

5 4 89 0 4

590700Textile fab impreg,ctd,cov nes;paintd canvas (e.g.threatrical scenery)

5 4 3 0 3

570242Carpets of man-made textile mat,of woven pile construction,made up,nes

5 3 86 0 3

630790Made up articles, of textile materials, nes, including dress patterns

5 3 339 0 3

570110Carpets of wool or fine animal hair, knotted

5 3 249 0 3

530500Coconut, abaca Manila hemp or Musa textilis Nee, ramie, agave and othe

5 2 157 0 2

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6.0 RECOMMENDATIONS6.1 Removing India’s NTBs

Both sides need to work to reduce their non-tariff barriers. However, as already argued, India should take the initiative in easing its NTBs first, especially since its NTBs are considered very difficult to overcome the world over. While it is true that all its trading partners face these NTBs (though Pakistan arguably faces them to a greater extent), given Pakistan and India’s unusually strained relations special concessions must be made by both sides in order to build the kind of goodwill that is imperative for easing the transition to normalized trade relations. Some NTBs such as visa and banking issues can be rectified fairly easily, whereas others (technical barriers to trade) will likely require sustained cooperation on both sides to make less unyielding.

Custom Procedures and Technical Barriers to Trade

Work should be done to make custom procedures more efficient and transparent. Both governments should invest in educating their exporters and custom officials about the other country’s regulations and requirements. The Pakistani government in particular needs to offer assistance to exporters as they negotiate the complex standards and requirements imposed by India. By the same token, India must work to improve the efficiency of its licensing and certification processes to avoid delays. Indian officials should be responsive to grievances voiced by Pakistani exporters, as should Pakistani officials when it comes to complaints from Indian businessman. India should also do more to assist Pakistan in establishing internationally accredited testing facilities since this would be a great stride towards making Pakistan-India trade more efficient. Once again, this may be seen as a demand for “special treatment” by Pakistan, but, as already argued, special treatment is exactly what is required by both sides given the facts of their relationship. If Pakistan is to open its doors to an economic giant like India, it should be able to expect special assistance on matters such as these, especially in light of its institutional weaknesses. Steps should also be taken towards harmonizing HS codes at levels higher than the 6-digit level between India and Pakistan. The fact that product classifications differ on both sides creates confusion and grants undue power to custom officials in terms of having final say on the classification of trade items.

Pakistan must work to improve its testing facilities and compliance with international standards if it hopes to hold its own in trade with India. While there has been some progress on this issue, much more must be done before NDMA is granted to India.

Banking

The previously initiated process of opening either country’s banks in the other should be completed. This is a relatively straightforward issue and has already seen substantial progress, though decisive action is yet to be taken. Payment delays should not be an impediment to trade, and so banking instruments must be developed that can keep pace with the short transaction times for goods moving via land routes. Current facilities allow payment receipts within 7 days whereas goods can be transported within a few hours. This is an easier fix than the issue of custom procedures and technical barriers to trade and therefore should be resolved expeditiously.

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Visa regime

While important steps have been taken by India to liberalize its visa regime for Pakistan, this study points out serious issues involving Indian visas for Pakistani businessmen that remain unaddressed. Again, grievances voiced by Pakistani businessmen should be taken seriously, since while on paper business visa terms now allow for greater flexibility, applicants reportedly face difficulty in actually acquiring Indian visas. Police reporting should be replaced with an alternative measure and the Indian visa regime for Pakistan should be made consistent with its regime for other countries. One of the major impediments to Pakistan-India trade is a lack of effective communication between the two country’s business communities. A fully liberal visa regime on both sides would help to establish the links needed for expanding trade.

6.2 Protecting local industries by strengthening the NTC

NDMA will mean that Pakistan will no longer be able to rely on tariff measures to protect certain local industries. Indian products are cheaper due to heavy subsidies and economies of scale. In certain cases the level of competition they will offer local industries will be devastating. Therefore, Pakistan must work to strengthen those industries that stand to face the most competition from India through countervailing and anti-dumping duties imposed in the light of NTC investigations. This will require building institutional capacity within the NTC. In order to fulfil its role the NTC must possess the resources to keep track of and adequately respond to Indian policy changes such as MEIS.

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Page 67: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

SECTION II :ANALYSIS OF

HIGH POTENTIAL PAKISTANI EXPORTS

TO INDIA

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7.0 ANALYSIS OF HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA

The following tables provide a quick overview of the analysis of Pakistan’s high potential exports to India.

TRADE POTENTIAL 90% of Pakistan’s total trade potential with India lies within the 438 analysed items at 6-digit HS code level.

CAGRAbout 50% of these 438 items have shown healthy growth in global Pakistani exports and global Indian imports while showing negative, low or zero growth in Pakistani exports to India.

BILATERAL RCA12% of these 438 items are exported at a “disproportionate” level to India, meaning the Indian market is a potentially important export destination for these items.

SENSITIVE LIST

32% of these 438 items are on India’s sensitive list for Pakistan, and they contain 28% of the total trade potential in the 438 items, suggesting that the sensitive list items are not disproportionately promising in terms of trade potential.

Sectors with Major Trade Potential from Analysed Products

SectorCurrent Exports

Total Trade Potential

Major Items Metrics Overview

Textile and Footwear

USD 57 million in 146 items

USD 852 million in 146 items

HS 6109 (T-shirts, singlets, knitted or crocheted), HS 6203 (Men’s suits, jackets, trousers), HS 6403 (Footwear, upper of leather)

35% high CAGR items,10% items with bilateral RCA>1, 49% items on India’s sensitive list

High growth in world exports by Pakistan and world imports by India without growth in Pak-India trade in many products, few disproportionately high Pak exports to India, items heavily protected by India

Agricultural Products

USD 81 million in 53 items

USD 360 million in 53 items

HS 120740 (sesamum seeds), HS 080410 (dates)

49% high CAGR items,15% items with bilateral RCA>1, 32% items on India’s sensitive list

High growth in world exports by Pakistan and world imports by India without growth in Pak-India trade in many products, few disproportionately high Pak exports to India, items moderately protected by India

PlasticsUSD 14 million in 25 items

USD 170 million in 24 items

HS 3915 (Waste and scrap of plastics) , HS 3920 (Other plates, sheets, films etc. of plastic), HS 3924 (Tableware, kitchenware, toiletry articles of plastic)

29% high CAGR items,21% items with bilateral RCA>1, 75% items on India’s sensitive list

High growth in world exports by Pakistan and world imports by India without growth in Pak-India trade in some products, few disproportionately high Pak exports to India, items heavily protected by India

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MachineryUSD 0.25 million in 31 items

USD 207 million in 31 items

HS 8411 (Turbo-jets, turbo propellers and other gas turbines), HS 8414 (air, vacuum pump)

77% high CAGR items, 10% items with bilateral RCA>1, 6% items on India’s sensitive list

High growth in world exports by Pakistan and world imports by India without growth in Pak-India trade in most products, few disproportionately high Pak exports to India, low protection of items by India

Pharmaceutical Products

USD 0.15 million in 10 items

USD 170 million in 10 items

HS 3003 (Medicament mixtures), HS 3004 (Medicament Mixtures)

70% high CAGR items, no items with bilateral RCA>1, 30% items on India’s sensitive list

High growth in world exports by Pakistan and world imports by India without growth in Pak-India trade in most products, some disproportionately high Pak exports to India, items moderately protected by India

The analysis detailed in the methodology section was carried out on Pakistani exports to India with trade potential equal to or in excess of USD 1 million. This limits this analysis to export items that command at minimum a market of USD 1 million in India and minimum Pakistani export earnings of USD 1 million as of 2014.

Pakistani exports to India within the 438 items that met the above criterion amounted to USD 233 million in 2014, out of total Pakistani exports to India of USD 392 million in the same year. Therefore, the 438 items represent 60% of total Pakistani exports to India. India’s imports within these items amounts to USD 191.5 billion, out of a total import bill of USD 459 billion in 2014.

Sectors with large potential for trade with India include textile and footwear, agricultural products, plastics and machinery. A closer look at these sectors follows this section of the study.

Trade Potential

The 438 Pakistani products with trade potential to India exceeding USD 1 million represented a total trade potential of USD 3.4 billion in 2014. The total trade potential to India for all 5541 Pakistani items with available data was USD 3.8 billion in 2014. Therefore the products taken into consideration for this analysis account for 90% of total Pakistani trade potential to India. So 8% of Pakistani export items at the 6-digit level accounted for 90% of total trade potential to India in 2014.33

33It should be kept in mind that trade potential only gives us information based on how things already are, and more specifically the extent to which trade can be extended with a particular country given current production. Therefore, Pakistan may have great untapped potential for world exports in product X, but due to factors such as wrongheaded government policies and insufficient support to producers the item is under-produced and very little export takes place. By the same token, India may have a thriving market for the high quality X Pakistan has the resources to provide, but that market is currently dominated by inferior domestic industries protected by heavy subsidies. Product X will not display “high trade potential”, where “trade potential” is defined the way it is in the methodology, even though it deserves attention. Therefore by measuring high trade potential we consider products whose “potential” has already been realized with the rest of the world, and so its lack of realization with a particular country (India in this case) can be seen as an opportunity to expand trade.

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CAGR

Out of these 438 items, 207 can be considered high potential CAGR items. That is to say, 207 items (47% of analysed items) witnessed healthy growth during the period 2004-2014 in PakistaniexportsoftheitemandIndianimportsoftheitem,butsawnegative,zero,orvery low growth in Pakistani exports to India of the item during the same period. This means that healthy trends are already in place- they must now be effectively harnessed to boost Pakistan-India trade. It is also instructive to note trends in total exports and imports in general. USD 1.4 billion of the trade potential in the 438 items lies within these high potential CAGR products. Therefore 41% of trade potential within the analysed items lies within products that have experienced favourable trends in their exports and imports by Pakistan respectively, but have failed to capitalize on these trends where Pakistan-India trade is concerned.

Only 4 high potential CAGR items exhibit a bilateral RCA> 1. These items deserve special attention since they have positive export and import trends and despite having a negative Pakistan-India export trend India is still a disproportionately important export destination for the relevant Pakistani products as compared to the rest of the world. They are listed below.

High potential CAGR products are highlighted in red in this study.

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Page 73: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

49

Bilateral RCA

Only52itemsoutofthe438exhibitabilateralRCAgreaterthan1.However,outofthetotal5541Pakistaniexportitemsatthe6-digitlevel,only200showabilateralrevealedcomparativeadvantagewithIndia.Furthermore,thesemere52itemsexhibitacollectivetrade potential of USD 790 million.

It is therefore the case that while only a few items are exported at disproportionately high levels to India as compared to the Pakistani exports to the rest of the world, many of them can draw on large export production by Pakistan and rely on strong demand from India. It should be noted that bilateral RCA> 1 on its own does not mean that India is the largest or even one of the largest markets for Pakistani exports in absolute terms for the relevant item. What bilateral RCA>1 tells us instead is that as things stand, product X’s percentage share of our export revenue from India exceeds its percentage share of export revenue from the world. Intuitively this suggests that India may be an important market for product X, and therefore these products deserve attention. Furthermore, bilateral RCA does not tell us the extent to which trade can be extended with the relevant country. TakingourtradepotentialfiguresintoconsiderationintandemwithbilateralRCA,however,tellsusthatthereissignificantroom for growth within items that already dominate our export basket to India. As already noted, 4 of the 52 bilateral RCA>1 items exhibit high potential CAGR values.

Sensitive List items

140 items out of the 438 analysed are on India’s sensitive list for Pakistan. USD 961 million worth of trade potential lies within these 140 items- so 28% of the trade potential lies within the 32% of the items out of the 438 that are on the sensitive list. This suggests that the sensitive list items considered are not disproportionately promising in terms of trade potential overall- on average they represent the same amount of trade potential as the non-sensitive list items considered.

Out of the 140 sensitive list items 62 exhibit high potential CAGR values- so 44% of the sensitive list items considered show high potential CAGR values, whereas 46% of the total 438 items show high potential CAGR values. This again suggests that the sensitive list items do not have a disproportionate number of high potential CAGR items among them. Inotherwords,positivetrends in exports by Pakistan and imports by India are not harnessed in sensitive list items and non-sensitive list items to about the same extent.

12 items out of the 140 sensitive list items show bilateral RCAs>1. Therefore 9% of sensitive list items exhibit greater than unity bilateral RCA values whereas 12% of the total 438 items considered exhibit the same. So sensitive list items are a little less disproportionately important to Pakistan’s export basket to India as compared to non-sensitive list items. This suggests that sensitive list items are also exported to India to a disproportionate extent at about the same rate as non-sensitive list items.

The fact that CAGR, trade potential and bilateral RCA metrics are about the same across sensitive and non-sensitive items suggests that sensitive items do not necessarily represent opportunities for trade with India that are appreciably more favourable than high potential non-sensitive list items.

Page 74: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

50

7.1 TOP 100 HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA

• Trade potential within the top 100 high potential items amounts to USD 2.6 billion out of a total trade potential at the 6-digit level for all 5541 items of USD 3.8 billion. So 70% of the total trade potential lies in these 100 items.

• 47 items exhibit high potential CAGR values with total trade potential of USD 1.07 billion.

• 15 items exhibit bilateral RCA values > 1 with total trade potential of USD 690 million.

• 31 items are on India’s sensitive list for Pakistan with total trade potential of 699 million.

• China is the major supplier to India for the highest number of products (38), followed by USA (9) and Bangladesh (9).

Page 75: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

51

TOP

100

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Page 76: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

52

TOP

100

HIG

H P

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AL

PAK

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Page 77: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

53

630

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Page 78: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

54

TOP

100

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H P

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IA

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Page 79: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

55

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Page 80: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

56

TOP

100

HIG

H P

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Page 81: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

57

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Page 82: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

58

TOP

100

HIG

H P

OTE

NTI

AL

PAK

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NI E

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Page 83: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

59

250

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Page 84: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

60

7.2 AGRICULTURAL PRODUCTS34

A total of 53 agricultural products from the total 438 items considered at the 6-digit level represent a trade potential with India of USD 360 million. Therefore, 12% of the 438 items represent 11% of the total trade potential. Pakistan’s total exports to India within these items stood at USD 81 million in 2014, whereas total Pakistani exports to the world amounted to USD 3.2 billion and total Indian imports from the world amounted to USD 1 billion.35

26 items out of the 53 exhibit high potential CAGR values- that is to say, about half of these items have shown healthy growth in exports to the world by Pakistan and imports from the world to India whereas there has been little or negative growth in Pakistani exports to India. The total amount of trade potential within these high potential CAGR items is USD 96.6 million.

Only 8 items out of the 53 exhibit bilateral RCA>1, suggesting that few of these items are more important as a part of our export basket to India relative to our export basket to the world. Notable high potential items include HS 120740 (sesamum seeds), which show trade potential of 53 million as well as bilateral RCA>1 and healthy trends in Pakistani exports and Indian imports, HS 080410 (Dates), which shows trade potential of USD 16.3 million along with a bilateral RCA>1 and significant growth again in Pakistani exports and Indian imports of the product to the world, and HS 030289 (fresh or chilled fish) which shows trade potential of USD 16.4 million and significant growth in both world exports by Pakistan and world imports by India. HS 8 (fruits), HS 12 (oil seeds, oleagic fruits etc) and HS 17 (Sugar and sugar confectionaries) items all show significant trade potential and high potential CAGR values.36

17 out of these 53 items are on India’s sensitive list for Pakistan. These items exhibit a collective trade potential of USD 108 million. So 31% of the relevant products contain 30% of the total trade potential within them- therefore the sensitive list items do not have disproportionately high potential on average. 9 of the 17 sensitive list items also have high potential CAGR metrics associated with them. Only two have bilateral RCAs exceeding unity. A major high potential item on the sensitive list is the aforementioned HS 120740 (sesamum seeds).

In summation, more than half of the high potential Agricultural items have experienced growth in Pakistani exports and Indian imports over 2004-2014 without accompanying growth in Pakistan-India trade, whereas only a few Pakistani agricultural items are currently exported to India at a disproportionately high rate. 30% of the items are on India’s sensitive list.

34The HS codes HS 01- HS 23 are included in this grouping.35Cumulative CAGR metrics for these 41 items would not be very suggestive since CAGR values are instructive in context with items taken singly at high code specifications, and CAGR values across HS codes are too generalized to tell us much of anything.36The complete list of high potential products is available, sorted by HS code, in Annexure A.

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

61

TOP

HIG

H P

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Page 86: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

62

7.3 PLASTICS (HS 39)

24 plastic items at the 6-digit level represent USD 170 million worth of trade potential with India. Therefore, this 5% of the 438 items considered accounts for 5% of the total trade potential. Pakistan’s total exports to India of these 25 items stood at USD 14 million in 2014, with global Pakistani exports of the items amounting to USD 208 million and global Indian imports of the items amounting to USD 2.1 billion.

7 items out of these 24 exhibit high potential CAGR metrics. These items account for USD 35.51 million of the total trade potential of USD 170 million.

5 items out of the 24 exhibit a bilateral RCA>1. These items have a total trade potential of 18.4 million. Notable high potential items include HS 390319 (Polystyrene), which exhibits a trade potential of USD 34.6 million and healthy trends in exports to the world by Pakistan and imports from the world to India, and HS 391590 (plastic waste), which displays a trade potential of USD 23 million and has high potential CAGR metrics associated with it. HS 3915 (waste and scrap of plastics), HS 3920 (other plates, sheets, films etc. of plastic) and HS 3924 (tableware, kitchenware, toiletry articles of plastic) all exhibit significant trade potentials and growth in Pakistani exports and imports of the relevant products.

18 out of the 24 items are on India’s sensitive list for Pakistan. These items display a collective trade potential of USD 111 million, and 7 of the items have favourable CAGR metrics associated with them. Only one of the sensitive list plastic items has a bilateral RCA value exceeding unity. Major high potential items on the sensitive list include HS 391590 (polythene waste and scrap) and HS 390262 (film and sheet of polythene terephthalates).

In summation, 30% of high potential plastics items have experienced growth in Pakistani world exports and Indian world imports with very low or negative growth in Pakistan-India trade, whereas only 20% are currently exported to India at a disproportionately high rate. 75% of these items are on India’s sensitive list for Pakistan.

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63

TOP

HIG

H P

OTE

NTI

AL

PAK

ISTA

NI P

LAST

ICS

EXPO

RTS

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IND

IA

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Page 88: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

64

7.4 TEXTILE AND FOOTWEAR37

146 items at the 6-digit HS code level represent USD 852 million worth of trade potential with India. Therefore 33% of the total items account for 25% of the total trade potential within the 438 items. Pakistan’s total exports to India of these 146 items stood at USD 57 million in 2014, with global Pakistani exports of the items amounting to USD 5.2 billion and global Indian imports of the items amounting to USD 2.7 billion.

52 items out of these 146 exhibit high potential CAGR metrics, suggesting that both Pakistani exports and Indian imports of these items have shown growth during the period 2004-2014 whereas there has been no corresponding growth in exports of these items to India by Pakistan. These items account for USD 246 million of the total trade potential of USD 852 million.

14 out of the 146 textile items exhibit a bilateral RCA>1, and account for USD 203 million of the total trade potential. This means that 9.5% of the items account for 24% of the total trade potential, suggesting that these items have disproportionately high trade potential and already form a more important part of Pakistan’s export basket to India relative to their share in Pakistan’s export basket to the world. Other notable high potential textile/footwear items include HS 620342 (men’s trousers and shorts, not knitted), and HS 640399 (footwear with outer soles of rubber/plastics).

71 items out of the 146 are currently on India’s sensitive list for Pakistan. These represent a collective trade potential of USD 535 million, with 26 of them also showing high potential CAGR metrics that exhibit a total trade potential of USD 134 million. Four sensitive list items have a bilateral RCA>1, and they represent a trade potential of USD 155 million, USD 144 million of it residing within HS 520100 (cotton, not carded or combed). Other notable high potential textile/footwear items include HS 620342 (men’s trousers and shorts, not knitted), and HS 640399 (footwear with outer soles of rubber/plastics). HS 6109 (T-shirts, singlets, knitted or crocheted), HS 6203 (Men’s suits, jackets, trousers) and HS 6403 (Footwear, upper of leather) all show significant trade potential.

In summation, 35% of high potential textile and footwear items have experienced growth in Pakistani world exports and Indian world imports without growth in Pakistan-India trade, whereas only 9% of the items are currently exported to India by Pakistan at a disproportionately high rate. About half of these items are on India’s sensitive list for Pakistan.

37The HS codes from HS 52 to HS 64 (all inclusive) are grouped under this category.

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

65

TOP

HIG

H P

OTE

NTI

AL

PAK

ISTA

NI T

EXTI

LE A

ND

FO

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

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7.5 MACHINERY (HS 84)

31 machinery (HS 84) items at the 6-digit HS code level represent USD 207 million worth of trade potential. So 7% of the total items analysed account for 6% of the total trade potential. Pakistan’s total exports to India of these 31 items stood at a mere USD 0.25 million in 2014, with global Pakistani exports of the items amounting to USD 212 million and global Indian imports of the items amounting to USD 6.5 billion.

24 items out of these 31 show high potential CAGR values. These items account for USD 178 million of the total machinery trade potential of USD 207 million.

Only three HS 84 items have a bilateral RCA>1, suggesting that most of these items do not rely disproportionately on the Indian market. The three items have a small collective trade potential of USD 5.68 million.

Only two items from the 31, HS 841821 (refrigerators, household type, compression type) and HS 841451 (fans: table, roof with a self-contained motor of an output exceeding 125 W), are on India’s sensitive list for Pakistan. They have a collective potential of USD 43.75 million, with USD 38.6 million residing in HS 841451, which also has high potential CAGR values associated with it. High potential 4-digit HS codes include HS 8411 (Turbo-jets, turbo propellers and other gas turbines), which has trade potential worth USD 39 million, and HS 8414 (air, vacuum pump), which shows trade potential worth USD 51.8 million.

In summation, 77% of high potential machinery items have experienced healthy growth in Pakistani world exports and Indian world imports without accompanying growth in Pakistan-India growth, whereas only 10% of these items are already exported to India at a disproportionately high rate. Only two items are on India’s sensitive list though both are very high potential items.

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TOP

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

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7.6 PHARMACEUTICAL PRODUCTS (HS 30)

10 pharmaceutical products at the 6-digit HS code level represent a trade potential of USD 170 million. So 2% of the 438 items considered represent 5% of the total trade potential. In 2014 Pakistan reported exports of these 10 items to India worth a mere USD 0.15 million, while global Pakistani exports of these items equalled USD 197 million and global Indian imports amounted to USD 762 million.

7 of these 10 items exhibit high CAGR values, suggesting that both Pakistani exports and Indian imports of these items have shown growth during the period 2004-2014 whereas there has been no corresponding growth in exports of these items to India by Pakistan. These 7 high potential CAGR items have a combined trade potential of USD 70 million.

3 of these 10 items are on India’s sensitive list for Pakistan. These 3 items have a combined trade potential of USD 35.7 million. Two of the items, HS 300420 and HS300390, have high potential CAGR values associated with them.

High potential 4-digit HS codes include HS 3004 (Medicament mixtures), which has trade potential amounting to USD 149 million, and HS 3003 (Medicament mixtures), which shows trade potential amounting to USD 20 million).

In summation, 70% of these pharmaceutical items have witnessed healthy growth in Pakistani world exports and Indian world imports without similar growth in Pakistan-India trade. None of these items are exported at a disproportionately high rate to India. 3 of these items are on India’s sensitive list for Pakistan.

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

69

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

70

Page 95: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

SECTION III: ANALYSIS OF

HIGH POTENTIAL INDIAN EXPORTS TO

PAKISTAN

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

72

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

73

8.0 ANALYSIS OF HIGH POTENTIAL INDIAN EXPORTS TO PAKISTAN

The following tables provide a quick overview of the analysis of India’s high potential exports to Pakistan.

TRADE POTENTIAL

81% of India’s total trade potential lies with India is within the 335 analysed items at 6-digit HS code level.

CAGRAbout 40% of these 335 items have shown healthy growth in global Indian exports and global Pakistani imports while showing negative, low or zero growth in Indian exports to Pakistan.

BILATERAL RCA32% of these 335 items are exported at a “disproportionate” level to Pakistan, meaning the Pakistani market is a relatively important export destination for these items.

NEGATIVE LIST21% of these 335 items are on Pakistan’s negative list, and they contain 18% of the total trade potential within the 335 items.

Sectors with Major Trade Potential

Sector

Current Indian

Exports to Pakistan

Trade Potential

Major Items Metrics Overview

Agricultural Products

USD 400 million in 23 items

USD 1.2 billion in 23 items

HS 090240 (Black tea), HS 230400 (Soya bean oil cake)

22% high CAGR items,69% items with bilateral RCA>1, 30% items on Pakistan’s sensitive list, none on negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in some products, many disproportionately high Indian exports to Pak, items moderately protected by Pakistan

MachineryUSD 26 million in 68 items

USD 1.9 billion in 68 items

HS 8421 (Centrifuges, incl. centrifugal dryers), HS 8422 (Dish-washing machines), HS 8431 (Machinery part)

35% high CAGR items, 25% items with bilateral RCA>1, 16% items on Pakistan’s negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in many products, many disproportionately high Indian exports to Pak, low protection of items by Pakistan

Vehicles other thanrailway,tramway

USD 0.09 million in 16 items

USD 1.1 billion in 16 items

HS 8703 (Cars), HS 8704 (Trucks)

88% high CAGR items, no items with bilateral RCA>1, 94% items on Pakistan’s negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in most products, no disproportionately high Indian exports to Pak, items heavily protected by Pakistan

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74

Sectors with Major Trade Potential

Sector

Current Indian

Exports to Pakistan

Trade Potential

Major Items Metrics Overview

Auto SectorUSD 31 million in 20 items

USD 756 million in 20 items

HS 4011 (New pneumatic tires of rubber), HS 8409 (Parts for use solely with motor engines)

65% high CAGR items, 20% items with bilateral RCA>1, 60% items on Pakistan’s negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in over half of all products, few disproportionately high Indian exports to Pak, items heavily protected by Pakistan

Iron and SteelUSD 0.09 million in 32 items

USD 1.2 billion in 32 items

HS 7208 (Flat-rolled products of iron, not clad), HS 7210 (Flat-rolled products of iron, plated or coated)

75% high CAGR items, no items with bilateral RCA>1, 50% items on Pakistan’s negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in many products, no disproportionately high Indian exports to Pak, items moderately protected by Pakistan

Organic ChemicalUSD 152 million in 24 items

USD 785 million in 24 items

HS 2902 (Cyclic Hyrdrocarbons), HS 2941(Antibiotics)

21% high CAGR items, 67% items with bilateral RCA>1, 25% items on Pakistan’s negative list

High growth in world exports by India and world imports by Pakistan without growth in India-Pak trade in few products, many disproportionately high Indian exports to Pak, items moderately protected by Pakistan

The analysis detailed in the methodology section was carried out on Indian exports to Pakistan with trade potential equal to or in excess of USD 10 million. This limits this analysis to export items that command at minimum a market of USD 10 million in Pakistan and minimum Indian export earnings of USD 10 million as of 2014.

Indian exports to Pakistan within the 335 items that met the above criterion amounted to USD 1.3 billion in 2014, out of total Indian exports to Pakistan of USD 2.2 billion in the same year. Therefore, the 438 items represent 60% of total Indian exports to Pakistan. Pakistan’s imports within these items amounts to USD 27.4 billion, out of a total import bill of USD 47.5 billion in 2014.

Trade Potential

The 335 Indian products with trade potential to Pakistan exceeding USD 10 million represented a total trade potential of USD 21.9 billion in 2014. This is notably far higher thanPakistan’stradepotentialtoIndia,whichwascalculatedtobeUSD3.4billion. The

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

75

total trade potential to India for all 4435 items with available data was USD 26.9 billion in 2014. Therefore the products taken into consideration for this analysis account for 81% of total Indian trade potential to Pakistan. So 7.6 % of Indian export items at the 6-digit level accounted for 81% of India’s total trade potential with Pakistan in 2014.

CAGR

Out of these 335 items, 138 can be considered high potential CAGR items. In other words, 137 items witnessed healthy growth during the period 2004-2014 in Indian exports of the itemandPakistani importsof the item,butsawnegative,zero,orvery lowgrowth inIndian exports to Pakistan of the item during the same period. This means that healthy trends are already in place- they must now be effectively harnessed to boost Pakistan-India trade.

USD 11.7 billion of the trade potential in the 335 items lies within these high potential CAGR products. Therefore 53% of trade potential within the analysed items lies within products that have experience favourable trends in their exports and imports by Pakistan respectively, but have failed to capitalize on these trends where Pakistan-India trade is concerned. For Pakistan only 41% of total calculated trade potential lay within high CAGR items, again suggesting that India stands to gain more from liberalized trade relations between the two countries than does Pakistan.

7 high potential CAGR items exhibit a bilateral RCA> 1. These items deserve special attention since they have positive export and import trends and despite having a negative India-Pakistan export trend Pakistan is still a disproportionately important export destination for these Indian products as compared to India’s exports to the rest of the world.

High potential CAGR products are highlighted in red in this study.

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76

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51.1

1-2

.38

%13

.16

%1.

92%

11.3

05%

N

40

1120

Pneu

mat

ic t

ires

new

of

rubb

er fo

r bu

ses

or lo

rrie

s26

.86

190

.18

575.

4216

3.32

3.0

3%9

.69

%8

.66

%9

.88

13%

Y

40

1110

Pneu

mat

ic t

ire

new

of

rubb

er f

mot

or c

ar in

cl

stat

ion

wag

ons&

racg

car

s1.

80

18.2

69

8.6

216

.46

-0.4

3%2.

19%

14.4

2%3.

87

25%

Y

2922

19A

min

o-al

coh

ols

nes

, th

eir

eth

ers

and

este

rs; s

alts

th

ereo

f0

.74

15.0

747

.76

14.3

3-0

.31%

12.0

9%

21.0

6%

3.28

5%N

390

720

Poly

eth

ers

nes

0.5

011

0.7

36

6.0

86

5.58

0.8

2%14

.09

%48

.74%

1.6

15%

N

530

310

Jute

an

d ot

her

tex

tile

bas

t fi

bres

, raw

or

rett

ed0

.08

39.2

815

.66

15.5

7-6

9.1

3%2.

72%

23.0

6%

1.12

0%

N

Page 101: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

77

Bilateral RCA

107 items out of the 335 exhibit a bilateral RCA greater than 1. These 107 items exhibit a collective trade potential of USD 4.7 billion.

These 107 items are exported at disproportionately high levels to Pakistan as compared to the Indian exports to the rest of the world, and many of them draw on large export production by India and rely on strong demand from Pakistan. Takingourtradepotentialfigures intoconsideration in tandemwith bilateral RCA therefore tells us that there is significantroom for growth within items that already dominate India’s export basket to Pakistan. As already noted, 7 of the 107 bilateral RCA>1 items exhibit high potential CAGR values.

Negative List items

90 items of the 335 analysed are on Pakistan’s negative list for India. These items represent a collective trade potential of USD 3.9 billion.

The primary HS codes from the 335 items considered that show up on the negative list include HS 39 (plastics), HS 72 (iron and steel), HS 84 (machinery), HS 85 (electrical, electronic equipment), and HS 87 (vehicles other than railway, tramway). 54 of the 90 negative list items have high potential CAGR values associated with them, and so 60% of these items have experienced growth in Indian exports to the world and Pakistani imports from the world but have not experienced commensurate growth in Indian exports to Pakistan.

10 of the 90 items have bilateral RCA values exceeding unity, suggesting that Pakistan is not a disproportionately important market for most of these Indian items.

Note: “Y” in the “Applied Tariff” column indicates the item’s inclusion in Pakistan’s negative list.

Page 102: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

78

9.1 TOP 100 HIGH POTENTIAL PAKISTANI EXPORTS TO INDIA

• Trade potential within the top 100 high potential items amounts to USD 17.4 billion out of a total trade potential at the 6-digit level for all 4435 items of USD 26.9 billion. So 65% of the total trade potential lies in these 100 items.

• 46 items exhibit high potential CAGR values with total trade potential of USD 10 billion.

• 29 items exhibit bilateral RCA values > 1 with total trade potential of USD 3.3 billion.

• 33 items are on Pakistan’s negative list for India with total trade potential of USD 2.9 billion.

Page 103: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

79

TOP

100

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

Pro

du

ct

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d E

xpo

rt

Ind

ia 2

014

Tr

ade

Pote

nti

al

Ind

ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

RIn

dia

Exp

ort

C

AG

RB

ilate

ral R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

Lis

t

2710

19O

ther

pet

role

um

oils

an

d pr

epar

atio

ns

21.9

36

,26

6.7

240

,68

2.15

6,2

44.7

9-3

.73%

14.7

5%26

.05%

0.1

15%

N

2710

12Li

ght

petr

oleu

m o

ils a

nd

prep

arat

ion

s0

.02

2,29

1.33

19,7

42.7

92,

291.

32_*

22.0

5%_*

03%

N

390

210

Poly

prop

ylen

e10

8.8

145

8.3

81,

209

.48

349

.57

16.5

5%11

.23%

11.6

9%

19.0

45%

N

90

240

Blac

k te

a (f

erm

ente

d) &

pa

rtly

fer

men

ted

tea

in

pack

ages

exc

eedg

3 k

g22

.61

319

.19

577.

85

296

.59

21.5

7%4.

74%

7.71

%8

.28

10%

Y

230

40

0So

ya-b

ean

oil-

cake

&ot

h s

olid

re

sidu

es,w

het

her

or

not

gr

oun

d or

pel

let

186

.86

478

.91

1,18

0.7

229

2.0

516

.64%

36.2

8%

4.48

%33

.56

%N

870

321

Au

tom

obile

s w

rec

ipro

catg

pi

ston

en

gin

e di

spla

cg n

ot

mor

e th

an 1

00

0 c

c0

283.

221,

199

.77

283.

220

4.74

%12

.59

%0

YY

300

220

Vac

cin

es, h

um

an u

se10

.28

288

.75

577.

97

278

.47

36.0

6%

49.1

3%23

.91%

3.77

5%N

520

100

Cot

ton

, not

car

ded

or

com

bed

259

.02

521.

64

2,8

21.6

526

2.6

320

.33%

-1.2

4%31

.66

%19

.43

0%

N

300

49

0M

edic

amen

ts n

es, i

n d

osag

e22

.33

279

.62

8,2

88

.88

257.

2830

.04%

12.0

3%23

.34%

0.5

714

%Y

290

243

P-xy

len

e11

3.6

634

9.3

41,

027

.79

235.

68

1.74

%3.

78%

13.9

3%23

.41

5%N

540

233

Text

ure

d ya

rn n

es,o

f po

lyes

ter

fila

men

ts,n

ot p

ut

up

for

reta

il sa

le0

.49

214.

268

02.

08

213.

7770

.16

%20

.25%

37.2

1%0

.13

YN

870

322

Au

tom

obile

s w

rec

ipro

catg

pi

ston

en

gin

e di

spla

cg >

10

00

cc

to 1

500

cc

0.0

121

2.44

3,23

6.8

021

2.43

-5.1

7%12

.34%

31.1

0%

0Y

Y

854

140

Phot

osen

siti

ve s

emic

ondu

ct

devi

ce,p

hot

ovol

taic

ce

lls&

ligh

t em

it d

iode

s0

205.

5617

4.72

174.

72*

-19

.49

%77

.99

%7.

20%

05%

N

7210

49

Flat

rol

led

prod

,i/n

as,p

late

d or

coa

ted

wit

h

zin

c,>

/=6

00

mm

wid

e, n

es0

170

.29

93.

2717

0.2

07.

99

%1.

29%

0Y

N

Page 104: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

80

TOP

100

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

Pro

du

ct

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d E

xpo

rt

Ind

ia 2

014

Tr

ade

Pote

nti

al

Ind

ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

RIn

dia

Exp

ort

C

AG

RB

ilate

ral R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

Lis

t

550

320

Stap

le fi

bres

of

poly

este

rs,

not

car

ded

or c

ombe

d0

.02

165.

4327

5.9

916

5.41

-25.

03%

27.5

6%

27.3

4%0

.01

YN

3824

90

Ch

emic

al/a

llied

indu

stry

pr

epar

atio

ns/

prod

s n

es6

.19

171.

4320

3.77

165.

2530

.35%

11.2

9%

23.9

3%6

.43

6%

N

40

1120

Pneu

mat

ic t

ires

new

of

rubb

er fo

r bu

ses

or lo

rrie

s26

.86

190

.18

575.

4216

3.32

3.0

3%9

.69

%8

.66

%9

.88

13%

Y

870

323

Au

tom

obile

s w

rec

ipro

catg

pi

ston

en

gin

e di

spla

cg >

15

00

cc

to 3

00

0 c

c0

162

835

.52

162

013

.11%

25.1

2%0

YY

851

770

Part

s of

tel

eph

one

sets

, te

leph

ones

for

cellu

lar

net

wor

ks o

r fo

r ot

her

0.0

116

0.3

350

1.9

416

0.3

3_*

-10

.11%

19.8

3%0

YN

720

839

Hot

rol

l iro

n/s

teel

nes

, coi

l >

60

0m

m x

<3m

m0

153.

83

303.

68

153.

83

048

.72%

5.8

3%0

YN

550

410

Stap

le fi

bres

of

visc

ose,

not

ca

rded

or

com

bed

32.7

183.

86

208

.68

151.

166

1.20

%9

.92%

29.2

0%

33.1

75%

N

851

762

Mac

hin

es f

or t

he

rece

ptio

n,

conv

ersi

on a

nd

tran

smis

sion

or

reg

ener

atio

034

6.3

113

5.9

135.

90

11.2

4%30

.74%

05%

N

88

024

0A

ircr

aft

nes

of

an u

nla

den

w

eigh

t ex

ceed

ing

15,0

00

kg

010

6.1

63,

431.

03

106

.16

0-1

1.59

%12

1.9

5%0

5%N

851

769

App

arat

us

for

the

tran

smis

sion

or

rece

ptio

n o

f vo

ice,

imag

es o

r ot

her

016

0.6

810

5.58

105.

580

-16

.78

%-1

.05%

03%

N

780

110

Lead

refi

ned

un

wro

ugh

t1.

05

102.

62

126

.08

101.

5721

.45%

26.0

7%49

.99

%1.

775%

N

84

198

9M

ach

iner

y,pl

ant/

labo

rato

ry

equ

ip f

tre

at o

f m

at b

y ch

ange

of

tem

p n

es0

.58

101.

2814

5.9

510

0.7

45.1

7%10

.98

%11

.85%

0.8

4Y

Y

90

189

0In

stru

men

ts a

nd

appl

ian

ces

use

d in

med

ical

or

vete

rin

ary

scie

nce

s, n

es0

.57

98

.96

208

.88

98

.39

38.5

6%

15.1

7%16

.59

%0

.58

5%N

Page 105: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

81

852

380

Gra

mop

hon

e re

cord

s an

d ot

her

med

ia fo

r th

e re

cord

ing

of s

oun

d or

of

ot0

97.

07

98

.79

7.0

70

3.17

%-2

8.5

6%

05%

N

270

119

Coa

l nes

, wh

eth

er o

r n

ot p

ulv

eris

ed b

ut

not

ag

glom

erat

ed0

466

.77

93.

229

3.22

09

.76

%5.

83%

00

%N

630

90

0W

orn

clo

thin

g an

d ot

her

w

orn

art

icle

s0

.47

182.

468

9.6

58

9.1

88

1.6

3%17

.37%

40.1

2%1.

115%

N

290

531

Ethy

len

e gl

ycol

(et

han

edio

l)0

.05

202.

91

87.

238

7.18

-13.

99

%-1

.90

%1.

09

%0

.11

0%

N

720

838

Hot

rol

l iro

n/s

teel

nes

, coi

l >

60

0m

m x

3-4

.75m

m0

85.

2112

4.31

85.

210

97.

58%

28.6

8%

0Y

N

850

44

0St

atic

con

vert

ers,

nes

0.2

28

4.34

453.

318

4.12

60

.39

%18

.91%

27.0

5%0

.16

%N

100

119

Du

rum

wh

eat

(exc

l. se

ed fo

r so

win

g)0

185.

08

81.

148

1.14

0_*

_*0

10%

Y

84

09

99

Part

s fo

r di

esel

an

d se

mi-

dies

el e

ngi

nes

0.0

18

0.4

958

4.9

18

0.4

9-8

.98

%7.

68

%14

.57%

0Y

Y

84

148

0A

ir o

r ga

s co

mpr

esso

rs,

hoo

ds0

.24

79.2

327.

1878

.96

5.17

%5.

77%

36.3

1%0

.15

15%

Y

40

210

Milk

pow

der

not

exc

eedi

ng

1.5%

fat

30.5

610

8.6

321

7.0

678

.07

43.1

5%32

.46

%21

.41%

29.8

25%

Y

740

311

Cop

per

cath

odes

an

d se

ctio

ns

of c

ath

odes

u

nw

rou

ght

076

.84

2,57

8.0

676

.84

-50

.60

%5.

62%

22.0

2%0

0%

N

96

020

0W

orkd

veg

/min

eral

car

vg

mat

&ar

t,ca

rvd

art

nes

;wor

kd

un

har

den

d ge

lati

n0

.26

74.7

28

9.4

274

.45

60

.33%

15.3

1%15

.01%

0.6

2Y

N

871

120

Mot

orcy

cles

wit

h r

ecip

roca

tg

pist

on e

ngi

ne

disp

lacg

> 5

0

cc t

o 25

0 c

c0

73.8

31,

753.

4273

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05.

40%

23.2

3%0

YY

210

69

0Fo

od p

repa

rati

ons

nes

0.8

271

168

.44

70.1

910

.33%

21.5

1%17

.69

%1.

02

8%

N

84

818

0Ta

ps, c

ocks

, val

ves

and

sim

ilar

appl

ian

ces,

nes

0.1

76

8.8

871

7.6

76

8.7

1-2

.15%

8.8

0%

18.3

0%

0.0

5Y

Y

730

423

Dri

ll pi

pe, s

eam

less

, of

a ki

nd

use

d in

dri

llin

g fo

r oi

l or

gas,

of

ir0

67.

7776

.42

67.

770

55.5

0%

10.7

0%

015

%Y

390

720

Poly

eth

ers

nes

0.5

110

.73

66

.08

65.

580

.82%

14.0

9%

48.7

4%1.

61

5%N

Page 106: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

82

TOP

100

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

Pro

du

ct

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d E

xpo

rt

Ind

ia 2

014

Tr

ade

Pote

nti

al

Ind

ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

RIn

dia

Exp

ort

C

AG

RB

ilate

ral R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

Lis

t

2711

19Pe

trol

eum

gas

es a

nd

oth

er

gase

ous

hydr

ocar

bon

s n

es,

liqu

efied

06

4.8

825

2.7

64.

88

012

.76

%31

.33%

03%

N

870

421

Die

sel p

ower

ed t

ruck

s w

ith

a

GV

W n

ot e

xcee

din

g fi

ve

ton

nes

06

3.43

271.

146

3.43

03.

56%

13.7

3%0

YY

84

2230

Mac

h f

fil/c

los/

seal

/etc

.btl

e/ca

n/b

ox/ b

ag/c

tnr

nes

,mac

h f

ae

ratg

bev

1.25

63.

449

6.5

62.

1949

.71%

17.3

3%23

.18

%2.

745%

N

850

720

Lead

-aci

d el

ectr

ic

accu

mu

lato

rs n

es0

61.

378

.27

61.

30

36.1

1%38

.64%

0Y

Y

84

314

3Pa

rts

of b

orin

g or

sin

kin

g m

ach

iner

y, w

het

her

or

not

se

lf-p

rope

lled

0.2

46

0.8

917

0.4

60

.65

116

.89

%8

.72%

41.9

4%0

.35%

N

850

213

Gen

erat

g se

ts,d

iese

l/sem

i-di

esel

en

gin

es,o

f an

ou

tpu

t ex

ceed

g 37

5 K

VA0

137.

7558

.97

58.9

60

3.0

1%19

.08

%0

.01

8%

Y

88

039

0Pa

rts

of b

allo

ons,

dir

igib

les,

an

d sp

acec

raft

nes

058

.77

165.

2958

.77

212.

49%

60

.94%

28.1

3%0

5%N

7219

90

Flat

rol

led

prod

, sta

inle

ss

stee

l, 6

00

mm

or

mor

e w

ide,

n

es0

58.6

68

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Page 107: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

83

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Page 108: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

84

TOP

100

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Page 109: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

85

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Page 110: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

86

9.2 AGRICULTURAL PRODUCTS38

23 agricultural products at the 6-digit HS code represent USD 1.2 billion worth of trade potential. Therefore, 6.9% of the total products analysed account for 5.4% of the total trade potential. Indian exports to Pakistan of these 23 products stood at USD 400 million in 2014, with total Indian exports to the world amounting to USD 3.8 billion and total Pakistani imports amounting to USD 1.9 billion for the same year.

5 out of these 23 items have high potential CAGR values associated with them, meaning that 22% of these items have shown healthy growth in Indian world exports and Pakistani world imports without accompanying growth in Indian exports to Pakistan. These 5 items represent a total trade potential of USD 185 million.

16 of these 23 items have bilateral RCA>1, which suggests that 70% of these items are exported in “disproportionate” amounts to Pakistan, meaning they form a relatively larger part of India’s export basket to Pakistan than they do of India’s export basket to the world. Therefore many Indian agricultural items have already found a foothold in Pakistan, one that further concessions would likely help secure.

None of these 23 items are on Pakistan’s negative list for India, while 7 are on Pakistan’s sensitive list under SAFTA, including high potential items HS 90240 (black tea), and HS 100119 (durum wheat).

In summation, only around 20% of these items have experienced healthy growth in Indian world exports and Pakistan world imports without accompanying growth in India-Pakistan trade, suggesting that most of these high potential items have grown in Indian exports to Pakistan. 70% of these Indian items are also already exported to Pakistan at a disproportionately high rate, further suggesting that Pakistan is a promising market for Indian agricultural exports. None of these items are on Pakistan’s negative list for India, which is also telling, since low protectionism on Pakistan’s part has likely improved the fortunes of Indian agricultural exporters.

38The following HS codes are included in the grouping: 01,02,04,05, 06, 07, 08, 09, 10, 11, 12, 13, 14, 17,18, 19, 21, 22, 23.

Page 111: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

87

TOP

HIG

H P

OTE

NTI

AL

IND

IAN

AG

RIC

ULT

UR

AL

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RTS

TO

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KIS

TAN

HS

cod

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lab

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dia

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14

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s to

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k

Pak

2014

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d

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014

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Page 112: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

88

9.3 MACHINERY (HS 84)

68 machinery items represent a total trade potential of USD 1.9 billion. So 20% of the 335 items considered represent 9% of the total trade potential of USD 21.9 billion. In 2014 India exported a mere USD 26 million worth of HS 84 products to Pakistan, whereas world exports of HS 84 by India amounted to USD 8 billion and world imports to Pakistan amounted to USD 2.6 billion.

24 items out of these 68 have high potential CAGR values associated with them. These high potential CAGR items exhibit a total trade potential of USD 746 million.

17 out of the 24 machinery items have bilateral RCAs that exceed unity. Therefore 70% of high potential machinery items are being exported to Pakistan by India to a “disproportionate” extent, suggesting that Indian products have found a niche in the Pakistani market. High potential HS codes at the 4-digit level include HS 8421 (Centrifuges, incl. centrifugal dryers), HS 8422 (Dish-washing machines) and HS 8431 (Machinery parts).

11 of these 24 items are on Pakistan’s negative list for India. All of these items are also on Pakistan’s sensitive list under SAFTA, in addition to 16 other items on the sensitive list. USD 963 million worth of trade potential lies within the 27 machinery items placed on Pakistan’s sensitive list, whereas the negative list items account for USD 497 million worth of trade potential. This suggests that Pakistan’s protectionist policies may play a central role in containing Indian imports of HS 84 items.

In summation, 35% of these high potential Indian machinery items have experienced growth in Indian world exports and Pakistan world imports without accompanying growth in India-Pakistan trade. However, once again 70% of these items are already being exported into Pakistan at a disproportionately high rate suggesting unusually fertile Pakistani markets for these Indian goods. 45% of these items are on Pakistan’s negative list for India.

Page 113: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

89

TOP

HIG

H P

OTE

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AL

IND

IAN

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INER

Y E

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Page 114: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

90

9.4 VEHICLES OTHER THAN RAILWAY, TRAMWAY (HS 87)

16 HS 87 items at the 6-digit HS code level represent a collective trade potential of USD 1.1 billion. So 5% of the total products analysed represent 5 % of the total trade potential for the 335 items. In 2014 Indian exports of these 16 items to Pakistan came out to a mere USD 90,000, with Indian exports to the world of these items amounting to USD 12.1 billion and Pakistani imports from the world amounting to USD 1.1 billion.

14 out of these 16 items show high potential CAGR values, suggesting that almost all of these items have positive trends in global Indian exports and global Pakistani imports that have not encompassed India-Pakistan trade. These 14 items predictably represent the bulk of the trade potential for HS 87 products: USD 1 billion.

None of these items have an RCA exceeding unity, which is understandable given the very low exports of these items by India to Pakistan and high exports of these items to the world. High potential HS codes include HS 8703 (Cars) and HS 8704 (Trucks).

15 of these items are on Pakistan’s negative list and all of them are on Pakistan’s sensitive list under SAFTA. The 15 negative list items represent USD 1 billion worth of trade potential. This seems to be the primary factor that has discouraged India auto exports to Pakistan, since all other factors seem to be conducive to trade in HS 84 items.

In summation, 88% of these items have experienced healthy growth in Indian world exports and Pakistani world imports without commensurate growth in India-Pakistan trade. None of these items are currently exported by India to Pakistan at a disproportionately high rate. Almost all of these items are on Pakistan’s negative list, which explains both the high potential CAGR items and the lack of items with bilateral RCAs>1.

Page 115: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

91

TOPHIGHPOTENTIALINDIANVEH

ICLESOTH

ERTHANRAILWAY,TRAMWAYTOPAKISTAN

HS

cod

ePr

od

uct

lab

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dia

20

14

Exp

ort

s to

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k

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2014

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323

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to 3

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120

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73.8

31,

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4273

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05.

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870

421

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a

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06

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271.

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3.43

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56%

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410

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Page 116: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

92

9.5 Auto Sector39

20 Auto sector items at the 6-digit HS code level (all of them displayed below) represent a collective trade potential of USD 752 million. So 6% of the total products analysed represent 3% of the total trade potential for the 335 items. In 2014 Indian exports of these 16 items to Pakistan came out to a mere USD 31 million, with Indian exports to the world of these items amounting to USD 6 billion and Pakistani imports from the world amounting to USD 882 million.

13 out of these 20 items show high potential CAGR values, indicating that more than half of these items have positive trends in global Indian exports and global Pakistani imports that have not encompassed India-Pakistan trade. These 13 items represent 75% of the trade potential for auto-sector products: USD 566 million.

4 of these items have an RCA exceeding unity, suggesting that some of them weigh relatively higher in India’s export basket to Pakistan than in its export basket to the world. High potential HS codes include HS 4011 (New pneumatic tires of rubber) and HS 8409 (Trucks).

12 of these items are on Pakistan’s negative list and 17 of them are on Pakistan’s sensitive list under SAFTA. Three products are on neither list. The 12 negative list items represent USD 429 million worth of trade potential. This, again, seems to be the primary factor that has discouraged India auto exports to Pakistan, since all other factors support greater trade than is currently taking place.

In summation, a little over half of these items have shown high growth in Indian world exports and Pakistani world imports without similar growth in India-Pakistan trade. 20% of these items are already being exported to Pakistan by India at a disproportionately high rate. 12 of the items are on Pakistan’s negative lists and Pakistan’s high degree of protectionism for the auto-sector seems to have effectively deterred imports of Indian auto goods.

39The list of HS code items that fall within the auto sector category was obtained from the paper “Changing features of the Automobile Industry in Asia: Comparison of Production, Trade and Market Structure in Selected Countries” by Nag, Banerjee and Chatterjee (2007). There is an overlap between HS 87 items and the auto-sector.

Page 117: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

93

TOP

HIG

H P

OTE

NTI

AL

IND

IA A

UTO

SEC

TOR

EX

POR

TS T

O P

AK

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N

HS

cod

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uct

lab

elIn

dia

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14

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k

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2014

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ia 2

014

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ak

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plie

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4011

20Pn

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f ru

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for

buse

s or

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26.8

619

0.1

857

5.42

163.

323.

03%

9.6

9%

8.6

6%

9.8

813

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99

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sem

i-di

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gin

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.49

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80

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139

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0.1

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330

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Y

Page 118: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

94

TOP

HIG

H P

OTE

NTI

AL

IND

IA A

UTO

SEC

TOR

EX

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O P

AK

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N

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cod

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uct

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dia

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k

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2014

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4016

93

Gas

kets

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190

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Page 119: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

95

9.6 IRON AND STEEL (HS 72, HS 73)

32 items within HS codes 72 and 73 at the 6-digit HS code level represent USD 1.2 billion worth of trade potential. India’s exports to Pakistan of these 32 items amounted to a very low USD 90,000 in 2014, whereas India’s world exports of the products equalled USD 5.1 billion and Pakistan’s imports amounted to USD 1.4 billion.

24 of these 32 items exhibit high potential CAGR values, suggesting that most of these iron and steel products have shown healthy growth in Indian world exports and Pakistan world imports but India’s exports to Pakistan have not shown similar growth. These 24 high potential CAGR items represent the bulk of the total iron and steel potential: USD 1 billion.

None of these items have a bilateral RCA exceeding unity, once again suggesting that iron and steel do not have a disproportionate share in India’s export basket to Pakistan. HS codes with high trade potential include HS 7208 (Flat-rolled products of iron, not clad) and HS 7210 (Flat-rolled products of iron, plated or coated).

16 of these 24 items are on Pakistan’s negative list, whereas the remaining 12 items are all on Pakistan’s sensitive list under SAFTA. The negative list items represent USD 722 million of the total trade potential.

In summation, 75% of these high potential iron and steel items have grown in Indian world exports and Pakistani world imports with very little or no growth in India-Pakistan trade. None of these items are exported to Pakistan at a disproportionately high rate. 66% of these items are on Pakistan negative list whereas all of the remaining items are on Pakistan’s sensitive list, suggesting that Pakistan’s protectionist policies in this case have worked.

Page 120: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

96

TOP

HIG

H P

OTE

NTI

AL

IND

IAN

IRO

N A

ND

STE

EL E

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RTS

TO

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KIS

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cod

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dia

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14

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k

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2014

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014

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7210

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>/=

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99

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720

839

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

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9.7 ORGANIC CHEMICALS (HS 29)

24 organic chemical items at the 6-digit HS code level represent USD 785 million worth of trade potential. In 2014 India reported USD 152 million worth of exports within these 24 items to Pakistan, with global Indian exports amounting to USD 4.2 billion and global Pakistani imports amounting to USD 1.2 billion.

5 items out of these 24 have high potential CAGR values associated with them, suggesting that most of these items have seen growth in global Indian exports, global Pakistani imports and Indian exports to Pakistan. The high potential CAGR items represent USD 283 million worth of trade potential.

16 of the 24 items have a bilateral RCA>1, which suggests that Pakistan is potentially important as a market for these organic chemical products. Items at the 4-digit HS code level with high trade potential include HS 2902 (Cyclic Hydrocarbons) and HS 2941 (Anti biotics).

6 of these items are on Pakistan’s negative list and three of these are also on Pakistan’s sensitive list under SAFTA. One other item is on Pakistan’s sensitive list. The negative list items represent a total trade potential of USD 173 million.

In summation, only 20% of these items have experienced growth in Indian world exports and Pakistan world imports without accompanying growth in India-Pakistan trade, suggesting that for the most part India-Pakistan trade has kept pace with India and Pakistan’s world trade in these items. Moreover, 67% of these items are already imported by Pakistan from India at a disproportionately high rate, indicating that Pakistani markets are good destinations for these high potential Indian goods. Only 25% of these organic chemical items are placed on Pakistan’s negative list.

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

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SECTION IV: CONCLUSION

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101

10.0 CONCLUSION

This study suggests that while considerable potential for trade expansion exists for both Pakistan and India post-NDMA, a host of factors ensure that India will be able to realize its trade potential whereas Pakistan will only realize a small fraction of the potential it currently possesses. A few central points regarding Pakistan-India trade normalization may help crystallize the findings of this study:

• India possesses very high potential for exports to Pakistan. Moreover, the Indian government offers substantive, consistent support to local producers in the form of subsidies, export support programs etc. to its already flourishing local industries. Indian industries therefore enjoy government support and economies of scale.

• Pakistan possesses considerable potential for exports to India. The Pakistani government offers little support to local industries, and is particularly weak when it comes to trade defense (the aforementioned challenges faced by the NTC, for instance). Pakistani industries therefore lack government support and are hence less able to defend its domestic market share.

• India has established deliberate and notoriously inflexible Non-Tariff Barriers which Pakistan lacks the resources to overcome to any appreciable degree. Pakistani exports will therefore face very serious resistance from Indian NTBs once trade is normalized.

• Pakistan has low Non-Tariff Barriers, most of them resulting from inefficiencies and a lack of resources, and also lacks proper enforcement of SPS standards. Indian exports will therefore face relatively little resistance from Pakistani NTBs once trade is normalized.

• Therefore,massivequantitiesofIndianproductsthatarecheaperthanlocalPakistaniproducts can easily enter Pakistan post-NDMA.On the other hand, low quantitiesof Pakistani products that will in many cases be less competitive than local Indian productswillenterIndiawithdifficultypost-NDMA.

This scenario will undoubtedly play out if Pakistan rushes to grant India NDMA given the current facts of Pakistan-India trade. The following measures must be decisively undertaken before granting India NDMA if the agreement is to be beneficial to both countries:

• India must agree to ease its Non-Tariff Barriers in substantive, quantifiable ways in order to level the playing field.

• Pakistan must build its capacity to support its exports and protect local industry from unfairly cheap imports.

• The exact details and time-frame of India’s promised concessions to Pakistan must be determined and considered before the granting of the NDMA.

• India’s concessions to Pakistan must be such that Pakistan receives fair access to the Indian market in line with the more favourable terms faced by other SAFTA countries such as Bangladesh and Sri Lanka.

So far, the above-mentioned issues remain largely unaddressed. However, it is these very issues that need to be taken up if Pakistan and India are to transition smoothly to a mutually beneficial trade relationship. There is clearly considerable potential for trade on both sides, but an equitable realization of this potential requires several pressing problems to be resolved through the two countries’ cooperation.

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103

Shown ahead are the opinions of Pakistani industries regarding Pakistan-India Trade normalization, and the perceived effects it may have on the local manufacturing industries. These submissions (including, but not limited to, interpretations, conclusions and recommendations) are solely reflective of the companies who have submitted the information, and do not reflect the findings of this report or the views of the Pakistan Business Council. The purpose of including these submissions is to allow for a wider range of viewpoints, broadening the reader’s perspective.

SECTION V: SECTORIAL PERSPECTIVES

ON PAKISTAN-INDIA TRADE NORMALIZATION

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104

NOTE FROM GATRON (INDUSTRIES) LIMITEDThere are many items where fixed per kg or per mtr duty is imposed by India if it is higher than the ad valorem rate. When Pakistan is granting India NDMA status it must ensure that in case of non-sensitive products where a SAFTA rate of 5% is applicable the higher per kg or per mtr specific duty rate is not applied on imports from Pakistan.

TOP HIGH POTENTIAL INDIAN PHARMACEUTICAL EXPORTS TO PAKISTAN

H S Code DescriptionAd volarem

rateFixed rate Applicability

Woven fabrics obtained from high tenacity yarn of nylon or of polyester

5407.1011 Parachute fabrics 10% Rs 115/kgWhich ever

is higher

5407.6110Polyester shirting cont. 85% or more by weight of non textured polyester filament

10% Rs 150/kgWhich ever

is higher

Woven fabrics of synthetic staple fibre containing 85% or more by weight staple fibre

5512.1910 Dyed 10%Rs 42/sq meter

Which ever is higher

5513.3900 other woven fabrics 10% Rs 120/Kg or

Rs 30/sq meter

Which ever is higher

Duty drawback on deemed basis was given by the Indian Government across the board in many sectors, particularly the polyester fabric and polyester products, despite the fact that the Indian Government hardly receives any duty on the import of raw materials of these products. Over 80% of the requirement of all the intermediate and basic raw material is produced within India with hardly any imports, yet the drawback benefits are still given to the industry. As can be seen below the drawback on yarn is 3% of the value of yarn and the drawback of fabric is 3% of value of finished fabric where the fabric value is normally two or four times the value of yarn for the same weight/kg. Since there are hardly any imports into India of Polyester Yarn and Polyester Fibre, import duties on Polyester Fibre and yarn are not collected but the drawback on fabric in rupee terms is still higher than the drawback on yarn/fibre.

Such drawbacks are credited within 2 to 3 days of the exporter’s bank account after the execution of the export transaction, even before the receipt of the export proceeds from the foreign buyer.

The Indian side recently confirmed that the Duty Entitlement Pass Book (DEPB) scheme which had duty drawback on deemed basis had been discontinued since October 2011 and hence duty drawbacks by India are no longer available on a deemed basis. However, the Pakistani side should learn from their Indian counterparts if (as claimed by the Indian side) drawback on deemed basis is not available:

• Why, then, are drawback rates still as high as 3% - 4% on all Synthetic Fibre/Yarn/Fabric items? (Please see table below)

• Why is the Fabrics duty drawback ad valorem rate the same (i.e. 3% on Fabric value) as the drawback on Yarn, which results in a much higher per Kg drawback on Fabrics? The impact of the import duty on raw materials per kg on Fabrics will still more or less be the same as that on Yarn, as India hardly imports Polyester Filament Yarn (PFY). This implies that drawback is still on a deemed basis.

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• Also the current drawback of PFY reflects deemed duty drawback as per the following working:

• Only 14% of total PTA consumption and 36% of MEG consumption in India is imported, so that 5% duty on PFY is collected on 14% of PTA quantity and 36% of MEG quantity – so the duty collected impact on raw materials is 24.64% [(14% x 0.86) + (36% x 0.35) = 24.64%]. Therefore the drawback should not be more than 1.23% which is 24.64% of the 5% duty on PTA/MEG.

• Moreover, since only 1% of PFY consumption is imported by India, the drawback on Fabrics (if not on deemed basis) should be the same per Kg as duty collected impact of 24.64% on PTA/MEG value (rather than Yarn or Fabric value) i.e. per Kg duty drawback on Filament Yarn and Fabric should be same.

As mentioned above, the Government of Pakistan as a policy does not provide deemed duty drawbacks to local industries due to financial constraints of the GOP, while the same is available across the board in India. Therefore the corresponding industry in Pakistan (e.g. Synthetic Yarn and Fabric) will not be able to export to India (due to the absence of deemed duty drawback) and will be competing with the tremendous exports by the Indian industry of that sector which receives deemed duty drawback.

In order to offset this, GOP should negotiate with India the right to impose corresponding Regulatory Duty without going through the Trade Defence procedures of Countervailing or Safeguard duty on those products where INDIA is giving deemed duty drawback, so that a hue and cry is not raised by local industries in Pakistan once trade with India opens up. (Particularly SMEs which neither have the resources or the expertise to file Anti-dumping Countervailing applications nor are capable of garnering the minimum number of applicants (industry strength) required for the same.

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106

Page 131: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

ANNEXURES

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108

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

109

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Glu

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Can

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Mal

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190

219

Un

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Prep

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Page 134: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

110

HIG

H P

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AL

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TO

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bel

Pak

2014

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Page 135: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

111

2510

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Page 136: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

112

HIG

H P

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NTI

AL

PAK

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NI E

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Page 137: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

113

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Page 138: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

114

HIG

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Page 139: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

115

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Page 140: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

116

HIG

H P

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Page 141: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

117

520

842

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Page 142: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

118

HIG

H P

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NTI

AL

PAK

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NI E

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Page 143: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

119

560

129

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Page 144: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

120

HIG

H P

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Page 145: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

121

611

510

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193

Men

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Page 146: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

122

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Page 147: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

123

630

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Page 148: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

124

HIG

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Page 149: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

125

730

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740

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Page 150: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

126

HIG

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NTI

AL

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NI E

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599

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122

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841

182

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199

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391

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490

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Page 151: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

127

841

830

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139

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843

149

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843

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843

89

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845

019

Hou

seh

old/

lau

ndr

y-ty

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ash

g m

ach

of

a dr

y lin

en c

apa

<=

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g,n

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.00

26.8

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99

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%32

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.00

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845

89

9La

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for

rem

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g m

etal

0.0

042

.35

1.42

1.42

0%

10.0

8%

27.8

3%0

.00

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18%

23%

847

330

Part

s&ac

cess

orie

s of

au

tom

atic

dat

a pr

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sg m

ach

ines

&u

nit

s th

ereo

f0

.00

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210

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10

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%

847

431

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cret

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0.0

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491.

81

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847

810

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hin

ery

for

prep

arin

g or

mak

ing

up

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cco

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0.0

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.54

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26.1

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.00

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19%

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847

98

9M

ach

ines

& m

ech

anic

al a

pplia

nce

s n

es

hav

ing

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al f

un

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ns

0.0

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0.7

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64

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848

180

Taps

, coc

ks, v

alve

s an

d si

mila

r ap

plia

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0.0

071

1.0

71.

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%16

.37%

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0.0

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5%19

%24

%

850

133

DC

mot

ors,

DC

gen

erat

ors,

of a

n o

utp

ut

exce

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75 K

W b

ut

nt

> 3

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.00

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120

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850

220

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erat

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h s

park

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n

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gin

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1.70

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.16

%0

.00

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Page 152: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

128

HIG

H P

OTE

NTI

AL

PAK

ISTA

NI E

XPO

RTS

TO

IND

IA

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de

Pro

du

ct la

bel

Pak

2014

Ex

po

rts

to In

dia

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ia 2

014

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orl

d

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ort

s

Pak

2014

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d

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2014

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ade

Pote

nti

al

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ia

CA

GR

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ia

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ort

C

AG

R

Pak

Exp

ort

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AG

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ral

RC

ASe

nsi

tive

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asic

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riff

Para

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riff

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plie

d

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ff

850

239

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tric

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erat

ing

sets

0.0

015

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.16

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850

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Part

s of

ele

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c m

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ner

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sets

& r

otar

y co

nver

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850

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Tran

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mer

s el

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ic p

ower

han

dlin

g ca

pa

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ut

<=

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0 K

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96

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850

434

Tran

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mer

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ic h

avg

a po

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han

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city

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eedg

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0 K

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29.9

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492.

490

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850

710

Lead

-aci

d el

ectr

ic a

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mu

lato

rs o

f a

kin

d u

sd f

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rtg

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on e

ngi

nes

0.0

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851

69

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rts

of e

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ro-t

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mic

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arat

us

of

hea

din

g N

o 8

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851

712

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mob

ile

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r fo

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851

762

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, con

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851

769

App

arat

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r ot

her

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851

770

Part

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, tel

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r fo

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0.0

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06

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66

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853

225

Elec

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al c

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s, fi

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lect

ric

of

pape

r or

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stic

s, n

es0

.00

9.4

01.

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280

%16

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0N

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853

710

Boar

ds,p

anel

s,in

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dg n

um

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al c

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ol

pan

els,

for

a vo

ltag

e <

=10

00

V0

.00

340

.64

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4.12

0%

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8%

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853

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Boar

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116

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81

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853

89

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rts

for

use

wit

h t

he

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dg

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85.

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535.

94

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854

411

Insu

late

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of c

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854

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854

449

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for

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e n

ot

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g 8

0 V

, nes

0.0

023

5.39

1.18

1.18

0%

18.8

5%17

.47%

0.0

0Y

8%

19%

27%

Page 153: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

129

854

470

Opt

ical

fibr

e ca

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854

89

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97

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870

120

Road

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ctor

s fo

r se

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raile

rs (

tru

ck

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tors

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870

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Part

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for

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.56

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870

840

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558

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870

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ts n

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871

120

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wit

h r

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> 5

0 c

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0.0

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871

410

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, in

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88

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89

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158

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159

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o 9

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s, u

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l sc

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2.24

44.7

119

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189

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stru

men

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appl

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m

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al o

r ve

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y sc

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7.45

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96

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08

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Inst

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& a

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940

179

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0.0

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18%

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Page 154: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

130

HIG

H P

OTE

NTI

AL

PAK

ISTA

NI E

XPO

RTS

TO

IND

IA

HS

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de

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du

ct la

bel

Pak

2014

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dia

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940

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128

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Page 155: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

131

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Page 156: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

132

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

133

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Page 158: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

134

HIG

H P

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NTI

AL

IND

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EX

POR

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lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

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Ind

ia 2

014

Tr

ade

Pote

nti

al

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ia-P

ak

CA

GR

Pak

Imp

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C

AG

R

Ind

ia

Exp

ort

C

AG

R

Bila

tera

l R

CA

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plie

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t

320

210

Syn

thet

ic o

rgan

ic t

ann

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tan

ces

3.6

017

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48.4

114

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41.8

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86

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320

415

Vat

dye

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d pr

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atio

ns

base

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3730

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329

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303%

N

320

416

Reac

tive

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d pr

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base

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.77

89

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68

3.6

151

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Y

320

417

Syn

thet

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rgan

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ents

an

d pr

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base

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320

611

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323

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322

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320

89

0Pa

ints

& v

arn

i bas

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nes

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113.

62

12.5

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118

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330

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Mix

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316

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330

290

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8.7

238

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95

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246

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9.9

37%

N

330

510

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r sh

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96

31.3

724

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22.3

478

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Y

340

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prep

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non

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55N

Y

340

120

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340

211

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340

213

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9N

N

340

490

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ifici

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prep

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017

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N

350

69

1A

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66

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N

350

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342

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N

380

89

1In

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64

57.9

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54.3

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811

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380

89

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cide

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28.2

635

1.0

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00

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380

89

3H

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nti

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lato

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3452

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333.

06

51.4

21.

63%

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0.8

55%

N

380

99

1Fi

nis

hg

agen

ts,d

ye c

arri

ers&

oth

pr

ep,n

es,f

or u

se in

th

e te

xtile

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st1.

3328

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39.1

427

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50.7

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13%

14.5

8%

7.21

8%

N

Page 159: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

135

3811

21Lu

bric

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oil a

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et o

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3811

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Prep

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nes

0.1

319

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3817

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Mix

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3822

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Com

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3823

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cids

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ls n

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3824

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6.1

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110

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4.47

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390

120

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190

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mer

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n p

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N

390

210

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prop

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145

8.3

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209

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390

69

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, in

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1.42

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96

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390

720

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390

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0.5

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3910

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5431

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3921

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Film

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152.

61

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9%

31.4

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Y

3923

50St

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cap

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NY

Page 160: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

136

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

HS

cod

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od

uct

lab

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dia

20

14

Exp

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Pa

k

Pak

2014

W

orl

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Imp

ort

s

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ia 2

014

W

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ia 2

014

Tr

ade

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ak

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Pak

Imp

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R

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t

3926

90

Art

icle

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pla

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s or

of

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ater

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of

Nos

39

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to 3

9.1

4 n

es1.

80

40.9

950

6.5

239

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34.2

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0.7

5N

N

4011

10Pn

eum

atic

tir

e n

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f ru

bber

f m

otor

car

in

cl s

tati

on w

agon

s&ra

cg c

ars

1.8

018

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98

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725

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4011

20Pn

eum

atic

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es n

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f ru

bber

for

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s or

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9.8

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61

Pneu

mat

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avin

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sim

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01

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5.8

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93

Gas

kets

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4016

99

Art

icle

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, oth

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25N

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es, s

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0.0

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20.7

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9.5

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21.9

6%

12.3

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.51

0%

N

480

255

Un

coat

ed p

aper

an

d pa

perb

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, of

a ki

nd

use

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r w

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ng,

pri

nti

ng

or0

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25.8

339

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25.8

30

10.1

3%20

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0.0

0N

Y

480

262

Un

coat

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aper

an

d pa

perb

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, of

a ki

nd

use

d fo

r w

riti

ng,

pri

nti

ng

or0

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21.7

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7_*

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NY

4810

92

Mu

lti-p

ly p

aper

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perb

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, coa

ted

on

one

or b

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sid

es w

ith

kao

li0

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97.

1917

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17.5

30

14.5

1%50

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.00

NY

4811

41Se

lf-a

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pape

r an

d pa

perb

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, su

rfac

e-co

lou

red,

su

rfac

e-de

cora

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.15

12.7

431

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12.5

96

8.4

6%

9.7

8%

46.5

2%1.

03

NY

4811

59Pa

per

and

pape

rboa

rd, s

urf

ace-

colo

ure

d,

surf

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rate

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pri

nte

d,0

.00

36.8

879

.98

36.8

80

22.3

6%

42.2

8%

0.0

0N

N

490

199

Book

s, b

roch

ure

s, le

aflet

s an

d si

mila

r pr

inte

d m

atte

r, n

es0

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29.5

831

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29.5

6-1

2.32

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15.1

7%0

.12

0%

N

490

700

Un

usd

pos

tage

,rev

enu

e st

amps

;ch

equ

e fo

rms,

ban

knot

es,b

ond

cert

ific,

etc

0.0

032

2.38

40.6

240

.62

09

8.5

3%6

2.8

3%0

.00

5%N

500

790

Wov

en f

abri

cs o

f si

lk, n

es0

.00

19.7

710

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10.7

10

82.

59%

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60

%0

.00

6%

N

520

100

Cot

ton

, not

car

ded

or c

ombe

d25

9.0

252

1.6

42,

821

.65

262.

63

20.3

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31.6

6%

19.4

30

%N

520

851

Plai

n w

eave

cot

ton

fab

rics

,>/=

85%

, not

m

ore

than

10

0 g

/m2,

pri

nte

d0

.01

14.3

412

5.59

14.3

3-2

2.35

%48

.79

%17

.26

%0

.01

8%

N

Page 161: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

137

530

310

Jute

an

d ot

her

tex

tile

bas

t fi

bres

, raw

or

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.08

39.2

815

.66

15.5

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9.1

3%2.

72%

23.0

6%

1.12

0%

N

540

233

Text

ure

d ya

rn n

es,o

f po

lyes

ter

fila

men

ts,n

ot p

ut

up

for

reta

il sa

le0

.49

214.

268

02.

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Yarn

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visc

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rayo

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540

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lam

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15%

Y

550

130

Fila

men

t to

w o

f ac

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, not

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0.0

633

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51.3

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9.5

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550

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N

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fibr

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nes

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N

5510

11Ya

rn,>

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f ar

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sta

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not

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.86

11.7

142

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N

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560

312

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56.1

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560

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69

17.3

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Page 162: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

138

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

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69

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42.2

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0N

N

69

08

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s, c

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710

812

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63

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187.

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N

7113

19A

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f/o

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w

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711

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/ste

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NN

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x

0.5

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.00

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720

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N

720

927

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.00

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70

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7210

12Fl

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90

8.9

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.00

15%

Y

7210

49Fl

at r

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ted

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nc,

>/=

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ide,

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00

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NN

Page 163: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

139

7210

70Fl

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319

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21.5

00

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7.0

8%

0.0

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7213

91

Hot

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bar/

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0.0

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015

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7219

90

Flat

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led

prod

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r m

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wid

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es0

.00

58.6

68

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7.57

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0.0

15%

N

7224

90

Sem

i-fin

ish

ed p

rodu

cts

of a

lloy

stee

l o/t

st

ain

less

0.0

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75.0

125

.02

08

3.44

%17

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0.0

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N

7225

11Fl

at-r

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rain

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0.0

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N

7225

19Fl

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60

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m, n

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15.5

211

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11.3

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0%

N

7225

30Fl

at r

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s,o/

t st

ain

less

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m,n

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171.

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845

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N

7227

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r,in

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27.5

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13.1

50

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.00

NN

730

419

Lin

e pi

pe o

f a

kin

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oil o

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.00

13.6

611

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113

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423

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use

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l or

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67.

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67.

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0.0

015

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429

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ings

,,tu

bin

g, d

rill

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oil

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0.0

020

%Y

730

439

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s,pi

pe &

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file

s,i o

r n

as,s

mls

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ss s

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.00

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.00

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Y

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Tube

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ipe

& h

ollo

w p

rofi

les,

iron

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stee

l, sm

ls, n

es0

.00

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2.8

211

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3%0

.00

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Y

730

640

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,pip

e&h

ollo

w p

rofi

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tain

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ss s

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216

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71.9

916

.40

_*11

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6N

N

730

729

Fitt

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pip

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be o

f st

ain

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231

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Y

730

89

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ctu

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7318

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133

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65

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740

311

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per

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N

Page 164: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

140

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

HS

cod

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lab

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N

760

110

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min

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35.6

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760

120

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18.5

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760

612

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N

760

719

Foil,

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, not

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117

.16

15.6

3%10

.12%

9.0

1%1.

2212

%Y

760

720

Foil,

alu

min

ium

,bac

ked,

not

exc

eedi

ng

0.2

mm

th

ick

excl

udi

ng

any

back

ing

0.0

016

.35

13.4

613

.46

-31.

58%

1.8

9%

-1.7

6%

0.0

020

%Y

7612

90

Con

tain

er,a

lum

,cap

<30

0L,

lined

/hea

t in

sul/n

t,n

/ftd

w/m

ech

/th

erm

o eq

uip

0.1

819

.49

38.8

519

.32

41.0

7%13

.89

%26

.08

%0

.96

13%

Y

7616

99

Art

icle

s of

alu

min

ium

, nes

0.0

212

.19

347.

7012

.18

23.1

1%6

.79

%30

.39

%0

.01

7%N

780

110

Lead

refi

ned

un

wro

ugh

t1.

05

102.

62

126

.08

101.

5721

.45%

26.0

7%49

.99

%1.

775%

N

820

719

Rock

dri

llin

g/ea

rth

bor

ing

tool

s, n

es, p

arts

0.0

125

.42

94.

4425

.41

_*18

.78

%59

.63%

0.0

35%

N

840

211

Wat

ertu

be b

oile

rs w

ith

a s

team

pro

duct

ion

ex

ceed

ing

45T

per

hou

r0

.00

20.6

777

.98

20.6

70

31.1

8%

31.8

0%

0.0

016

%Y

840

212

Wat

ertu

be b

oile

rs w

ith

a s

team

pro

duct

ion

n

ot e

xcee

din

g 45

T pe

r h

our

0.5

312

.11

33.1

111

.59

_*35

.56

%17

.85%

3.36

20%

Y

840

219

Vap

our

gen

erat

ing

boile

rs n

es, i

ncl

udi

ng

hybr

id b

oile

rs0

.00

25.3

636

.87

25.3

60

57.6

7%5.

89

%0

.00

18%

Y

840

68

2Tu

rbin

es n

es, o

utp

ut

, 40

MW

4.10

17.3

818

.34

13.2

99

5.0

7%18

.72%

31.4

7%4

7.27

5%N

840

69

0Pa

rts

of s

team

an

d va

pou

r tu

rbin

es1.

726

9.1

151

.87

50.1

56

9.3

7%35

.96

%36

.85%

7.0

25%

N

840

710

Air

craf

t en

gin

es, s

park

-ign

itio

n

reci

proc

atin

g or

rot

ary

type

0.0

011

.98

617

.94

11.9

80

5.29

%74

.63%

0.0

05%

N

840

89

0En

gin

es, d

iese

l nes

0.0

011

.18

311.

92

11.1

80

8.2

3%13

.61%

0.0

0N

Y

840

99

1Pa

rts

for

spar

k-ig

nit

ion

typ

e en

gin

es n

es0

.00

56.9

728

3.34

56.9

70

19.3

9%

11.6

4%

0.0

0N

Y

840

99

9Pa

rts

for

dies

el a

nd

sem

i-die

sel e

ngi

nes

0.0

18

0.4

958

4.9

18

0.4

9-8

.98

%7.

68

%14

.57%

0.0

0N

Y

841

09

0Pa

rts

of h

ydra

ulic

tu

rbin

es &

wat

er w

hee

ls

incl

udi

ng

regu

lato

rs0

.00

11.4

849

.36

11.4

80

14.3

5%34

.02%

0.0

05%

N

841

182

Gas

tu

rbin

es n

es o

f a

pow

er e

xcee

din

g 50

00

KW

0.0

028

.48

15.4

515

.45

055

.17%

-6.6

0%

0.0

05%

N

841

199

Part

s of

gas

tu

rbin

es n

es0

.00

102.

69

57.7

557

.75

011

.24%

19.2

2%0

.00

5%N

Page 165: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

141

841

280

Engi

nes

an

d m

otor

s n

es0

.00

91.

5428

.34

28.3

40

120

.30

%46

.67%

0.0

07%

N

841

330

Fuel

, lu

bric

atin

g or

coo

ling

med

ium

pu

mps

for

int

com

b pi

ston

en

gin

es0

.00

19.4

112

4.6

419

.41

017

.37%

18.6

3%0

.00

NY

841

370

Cen

trif

uga

l pu

mps

nes

0.2

735

.52

201.

5435

.26

56.6

5%28

.21%

17.6

2%0

.28

13%

Y

841

391

Part

s of

pu

mps

for

liqu

id w

het

her

or

not

fi

tted

wit

h a

mea

surg

dev

ice

0.0

122

.83

290

.89

22.8

2-1

1.8

5%6

.65%

21.4

4%

0.0

113

%Y

841

430

Com

pres

sors

of

a ki

nd

use

d in

ref

rige

rati

ng

equ

ipm

ent

0.3

313

2.24

32.8

932

.57

15.3

0%

9.5

2%8

.53%

2.11

5%N

841

451

Fan

s: t

able

,roo

f et

c w

a s

elf-

con

t el

ec m

tr

of a

n o

utp

ut

nt

excd

g 12

5W0

.00

14.9

547

.24

14.9

5_*

33.2

0%

6.1

7%0

.00

NY

841

459

Fan

s n

es0

.03

10.1

222

.97

10.0

94.

21%

18.3

9%

33.8

8%

0.2

923

%Y

841

480

Air

or

gas

com

pres

sors

, hoo

ds0

.24

79.2

032

7.18

78.9

65.

17%

5.77

%36

.31%

0.1

515

%Y

841

490

Part

s of

vac

uu

m p

um

ps, c

ompr

esso

rs,

fan

s, b

low

ers,

hoo

ds0

.08

29.6

024

8.5

529

.53

20.1

1%12

.51%

21.0

2%0

.06

8%

Y

841

510

Air

con

diti

onin

g m

ach

ines

win

dow

or

wal

l ty

pes,

sel

f-co

nta

ined

0.0

019

.72

38.0

619

.72

0-9

.68

%2.

12%

0.0

021

%Y

841

590

Part

s of

air

con

diti

onin

g m

ach

ines

0.0

057

.37

71.8

857

.37

-76

.24%

12.4

8%

17.0

2%0

.00

NY

841

86

9Re

frig

erat

ing

or f

reez

ing

equ

ipm

ent

nes

0.0

627

.51

35.7

427

.44

68

.18

%14

.39

%12

.33%

0.3

815

%Y

841

89

9Pa

rts

of r

efri

gera

tin

g or

fre

ezin

g eq

uip

men

t, n

es0

.00

32.7

549

.51

32.7

50

11.8

4%26

.21%

0.0

010

%Y

841

98

9M

ach

iner

y,pl

ant/

labo

rato

ry e

quip

f t

reat

of

mat

by

chan

ge o

f te

mp

nes

0.5

810

1.28

145.

95

100

.70

45.1

7%10

.98

%11

.85%

0.8

4N

Y

841

99

0Pa

rts

of m

ach

iner

y, p

lan

t an

d eq

uip

men

t of

hea

din

g N

o 8

4.19

0.1

550

.61

84.

5050

.46

42.4

6%

25.1

7%11

.30

%0

.36

13%

Y

842

119

Cen

trif

uge

s n

es0

.15

16.2

073

.56

16.0

536

.02%

10.3

8%

20.7

2%0

.43

5%N

842

121

Filt

erin

g or

pu

rify

ing

mac

hin

ery

and

appa

ratu

s fo

r w

ater

0.8

637

.40

85.

2336

.54

68

.18

%23

.62%

33.9

7%2.

1425

%Y

842

129

Filt

erin

g or

pu

rify

ing

mac

hin

ery

and

appa

ratu

s fo

r liq

uid

s n

es0

.11

10.2

528

.11

10.1

40

.66

%4.

93%

35.4

4%

0.7

925

%Y

842

139

Filt

erin

g or

pu

rify

ing

mac

hin

ery

and

appa

ratu

s fo

r ga

ses

nes

0.1

326

.36

104.

5826

.23

5.9

4%2.

93%

42.7

4%

0.2

616

%Y

842

230

Mac

h f

fil/c

los/

seal

/etc

.btl

e/ca

n/b

ox/ b

ag/

ctn

r n

es,m

ach

f a

erat

g be

v1.

256

3.44

96

.50

62.

1949

.71%

17.3

3%23

.18

%2.

745%

N

842

240

Pack

ing

or w

rapp

ing

mac

hin

ery

nes

0.0

523

.45

31.2

423

.40

-13.

84%

7.8

0%

10.2

1%0

.35

5%N

842

290

Pts

of d

ish

was

hin

g,cl

ean

g or

dry

g co

nta

iner

,pac

kg o

r w

rapp

g m

ach

0.2

618

.84

43.4

418

.57

5.54

%29

.66

%19

.28

%1.

295%

N

Page 166: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

142

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

HS

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d

Exp

ort

Ind

ia 2

014

Tr

ade

Pote

nti

al

Ind

ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

R

Ind

ia

Exp

ort

C

AG

R

Bila

tera

l R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

lis

t

842

959

Self

-pro

pelle

d ex

cava

tin

g m

ach

iner

y n

es0

.34

31.0

010

9.8

030

.66

_*0

.17%

30.6

5%0

.65

5%N

843

049

Bori

ng

or s

inki

ng

mac

hin

ery

nes

, not

sel

f-pr

opel

led

0.0

08

8.6

837

.80

37.8

00

19.8

8%

28.4

9%

0.0

05%

N

843

139

Part

s of

lift

ing,

han

dlin

g, lo

adin

g or

u

nlo

adin

g m

ach

iner

y n

es0

.00

13.3

76

2.0

013

.37

83.

78%

33.1

1%20

.73%

0.0

05%

N

843

143

Part

s of

bor

ing

or s

inki

ng

mac

hin

ery,

w

het

her

or

not

sel

f-pr

opel

led

0.2

46

0.8

917

0.4

06

0.6

511

6.8

9%

8.7

2%41

.94

%0

.30

5%N

843

149

Part

s of

cra

nes

,wor

k-tr

uck

s,sh

ovel

s,an

d ot

her

con

stru

ctio

n m

ach

iner

y0

.06

40.8

933

1.9

940

.82

_*12

.33%

36.3

8%

0.0

45%

N

844

511

Text

ile c

ardi

ng

mac

hin

es0

.34

38.5

410

.51

10.1

622

.37%

-2.7

4%25

.85%

6.8

75%

N

844

519

Text

ile p

repa

rin

g m

ach

ines

nes

0.1

325

.11

14.3

514

.22

14.9

6%

-3.2

6%

18.4

0%

1.9

65%

N

844

520

Text

ile s

pin

nin

g m

ach

ines

7.10

58.2

310

9.8

851

.13

102.

92%

-8.2

6%

42.2

1%13

.68

5%N

844

839

Pts

& a

cces

s of

mac

h o

f h

eadi

ng

No

84.

45

or o

f th

eir

aux

mac

h n

es1.

3119

.67

18.1

516

.84

44.5

2%5.

86

%15

.07%

15.3

15%

N

845

140

Was

hin

g,bl

each

g or

dye

g m

ach

ines

(o/

t m

ach

ines

of

hea

dg N

o 8

4.50

)0

.31

13.5

312

.57

12.2

643

8.3

2%-1

1.0

2%26

.18

%5.

265%

N

845

180

Mac

h f

wri

ng/

dres

s/fi

nis

hg/

coat

g/im

preg

te

x ya

rns

etc(

o/t

hdg

No8

450

)0

.01

45.0

610

.21

10.2

0-1

7.30

%-1

.30

%21

.17%

0.1

75%

N

847

130

Port

able

dig

ital

com

pute

rs <

10kg

0.0

019

7.6

530

.97

30.9

7_*

17.6

7%10

.74

%0

.00

0%

N

847

141

Non

-por

tabl

e di

gita

l edp

mac

hin

es w

pr

oces

sor

& i/

o0

.11

14.0

328

.88

13.9

217

.50

%19

.36

%20

.27%

0.8

00

%N

847

150

Dig

ital

pro

cess

ing

un

its

not

sol

d as

co

mpl

ete

syst

ems

0.0

037

.08

57.4

137

.08

024

.67%

35.7

0%

0.0

00

%N

847

160

Com

pute

r in

put/

outp

uts

, wit

h/w

ith

out

stor

age

0.0

010

.47

23.1

010

.47

_*-1

4.8

5%5.

00

%0

.03

0%

N

847

290

Offi

ce m

ach

ines

, nes

0.8

215

.61

45.5

814

.79

37.6

7%12

.14%

23.1

2%3.

795%

N

847

330

Part

s&ac

cess

orie

s of

au

tom

atic

dat

a pr

oces

sg m

ach

ines

&u

nit

s th

ereo

f0

.01

13.4

511

5.8

813

.44

_*-1

2.34

%-7

.04

%0

.01

0%

N

847

420

Cru

shin

g/gr

indg

mac

hin

es fo

r ea

rth

/ sto

ne/

ores

o o

th m

iner

als

subs

etc

0.0

118

.56

64.

1018

.55

-51%

8.4

8%

35.2

0%

0.0

45%

N

847

490

Pts

of s

ortg

/scr

een

g/m

ixg/

cru

shg/

grin

din

g/w

ash

ing/

aggl

omer

atg

mac

h e

tc0

.00

13.9

914

7.17

13.9

925

.99

%22

.80

%34

.11%

0.0

06

%N

Page 167: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

143

847

710

Inje

ctio

n-m

ould

ing

mac

hin

es fo

r w

orki

ng

rubb

er o

r pl

asti

cs n

es0

.00

27.2

050

.28

27.2

0-1

9.7

6%

5.6

7%4.

71%

0.0

25%

N

847

730

Blow

mou

ldin

g m

ach

ines

for

wor

kin

g ru

bber

or

plas

tics

nes

0.0

010

.57

39.6

210

.57

01.

26%

18.5

4%

0.0

05%

N

847

780

Mac

h fo

r w

orkg

ru

bber

/pla

stic

s/fo

r th

e m

fr

of p

rods

form

th

ese

mat

nes

0.0

110

.07

40.6

610

.06

-31.

76%

9.2

2%19

.75%

0.0

55%

N

847

98

2M

ach

f m

ixin

g/kn

eadi

ng/

cru

shin

g/gr

indg

et

c n

es h

avg

indi

vid

fun

ctio

n0

.69

91.

62

28.8

428

.14

85.

23%

14.6

8%

27.4

3%5.

09

5%N

847

98

9M

ach

ines

& m

ech

anic

al a

pplia

nce

s n

es

hav

ing

indi

vidu

al f

un

ctio

ns

1.75

54.1

934

4.14

52.4

527

.41%

4.59

%18

.56

%1.

07

5%N

847

99

0Pa

rts

of m

ach

ines

&m

ech

anic

al a

pplia

nce

s n

es h

avg

indi

vidu

al f

un

ctio

ns

0.8

516

.83

138

.25

15.9

834

.72%

6.0

7%4.

02%

1.30

5%N

848

079

Mou

lds

for

rubb

er o

r pl

asti

cs, n

es0

.71

16.4

939

.41

15.7

79

2.8

6%

19.7

4%14

.03%

3.8

25%

N

848

110

Val

ves,

pre

ssu

re r

edu

cin

g0

.08

28.3

644

.52

28.2

840

6.6

2%35

.05%

16.0

3%0

.37

15%

Y

848

120

Val

ves

for

oleo

hydr

aulic

or

pneu

mat

ic

tran

smis

sion

s0

.00

16.0

822

.53

16.0

80

31.3

7%40

.00

%0

.00

6%

N

848

180

Taps

, coc

ks, v

alve

s an

d si

mila

r ap

plia

nce

s,

nes

0.1

76

8.8

871

7.6

76

8.7

1-2

.15%

8.8

0%

18.3

0%

0.0

5N

Y

848

190

Part

s of

tap

s, c

ocks

, val

ves

or s

imila

r ap

plia

nce

s0

.23

10.6

033

7.37

10.3

611

.71%

9.6

3%24

.86

%0

.15

6%

N

848

210

Bear

ings

, bal

l0

.14

38.4

558

.38

38.3

125

.80

%7.

14%

6.3

8%

0.5

05%

N

848

310

Tran

smis

sion

sh

afts

an

d cr

anks

, in

clu

din

g ca

m s

haf

ts a

nd

cran

k sh

afts

0.0

050

.17

255.

69

50.1

70

29.5

8%

22.2

4%

0.0

0N

Y

848

330

Bear

g h

ousi

ngs

,not

inco

rpor

atg

ball/

rolle

r be

arin

gs;p

lain

sh

aft

bear

gs0

.00

19.8

732

.86

19.8

7_*

16.7

7%21

.28

%0

.03

NY

848

340

Gea

rs&

gear

ing,

ball

scre

ws,

gear

bo

xes,

spee

d ch

ange

rs/t

orqu

e co

nver

ters

0.0

618

.01

154.

96

17.9

6_*

8.5

3%25

.53%

0.0

8N

Y

850

140

AC

mot

ors,

sin

gle-

phas

e, n

es0

.00

13.1

78

4.6

613

.17

-29

.29

%17

.19

%5.

98

%0

.00

NN

850

152

AC

mot

ors,

mu

lti-p

has

e,of

an

ou

tpu

t ex

ceed

g 75

0 W

bu

t n

ot e

xcee

dg 7

5 K

W0

.05

20.1

822

.84

20.1

4-2

.11%

22.6

7%29

.83%

0.4

313

%Y

850

164

AC

gen

erat

ors,

of

an o

utp

ut

exce

edin

g 75

0 K

VA0

.99

74.9

956

.35

55.3

6_*

34.5

3%40

.88

%3.

7313

%Y

850

211

Gen

erat

g se

ts,d

iese

l/sem

i-die

sel

engi

nes

,of

an o

utp

ut

not

exc

ed 7

5 K

VA0

.00

42.0

534

.44

34.4

40

13.0

0%

21.3

3%0

.00

15%

Y

850

212

Gen

erat

g se

ts,d

iese

l/sem

i-die

sel e

xcee

dg

75 K

VA b

ut

not

exc

ed 3

75 K

VA0

.00

16.8

028

.01

16.8

00

13.4

1%21

.25%

0.0

015

%Y

Page 168: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

144

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

HS

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d

Exp

ort

Ind

ia 2

014

Tr

ade

Pote

nti

al

Ind

ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

R

Ind

ia

Exp

ort

C

AG

R

Bila

tera

l R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

lis

t

850

213

Gen

erat

g se

ts,d

iese

l/sem

i-die

sel

engi

nes

,of

an o

utp

ut

exce

edg

375

KVA

0.0

013

7.75

58.9

758

.96

03.

01%

19.0

8%

0.0

18

%Y

850

220

Gen

erat

ing

sets

wit

h s

park

-ign

itio

n

inte

rnal

com

bust

ion

pis

ton

en

gin

es0

.03

56.4

148

.31

48.2

8-7

3.78

%10

.70

%26

.17%

0.1

46

%N

850

239

Elec

tric

gen

erat

ing

sets

0.6

513

4.29

17.0

516

.40

111.

32%

31.4

8%

33.5

0%

8.1

05%

N

850

300

Part

s of

ele

ctri

c m

otor

s,ge

ner

ator

s,ge

ner

atg

sets

& r

otar

y co

nver

ters

0.7

747

.21

248

.24

46.4

46

5.57

%17

.41%

23.2

4%

0.6

610

%Y

850

434

Tran

sfor

mer

s el

ectr

ic h

avg

a po

wer

han

dlg

capa

city

exc

eedg

50

0 K

VA,n

es0

.00

38.4

918

.31

18.3

10

49.9

4%12

.89

%0

.00

NY

850

440

Stat

ic c

onve

rter

s, n

es0

.22

84.

3445

3.31

84.

126

0.3

9%

18.9

1%27

.05%

0.1

06

%N

850

490

Part

s of

ele

ctri

cal t

ran

sfor

mer

s, s

tati

c co

nver

ters

an

d in

duct

ors

0.0

118

.26

171.

3918

.25

-34.

55%

22.0

5%16

.37%

0.0

1N

N

850

720

Lead

-aci

d el

ectr

ic a

ccu

mu

lato

rs n

es0

.00

61.

3078

.27

61.

300

36.1

1%38

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%0

.00

NY

851

220

Ligh

tin

g or

vis

ual

sig

nal

ling

equ

ipm

ent

nes

0.0

013

.38

57.8

613

.38

013

.12%

19.5

7%0

.00

NY

851

762

Mac

hin

es fo

r th

e re

cept

ion

, con

vers

ion

an

d tr

ansm

issi

on o

r re

gen

erat

io0

.00

346

.31

135.

90

135.

90

011

.24%

30.7

4%

0.0

05%

N

851

769

App

arat

us

for

the

tran

smis

sion

or

rece

ptio

n o

f vo

ice,

imag

es o

r ot

her

0.0

016

0.6

810

5.58

105.

580

-16

.78

%-1

.05%

0.0

03%

N

851

770

Part

s of

tel

eph

one

sets

, tel

eph

ones

for

cellu

lar

net

wor

ks o

r fo

r ot

her

0.0

116

0.3

350

1.9

416

0.3

3_*

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19.8

3%0

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NN

852

352

Car

ds in

corp

orat

ing

one

or m

ore

elec

tron

ic

inte

grat

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its

smar

t c

0.0

123

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102.

00

23.1

4_*

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7%#

DIV

/0!

0.0

25%

N

852

380

Gra

mop

hon

e re

cord

s an

d ot

her

med

ia fo

r th

e re

cord

ing

of s

oun

d or

of

ot0

.00

97.

07

98

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97.

07

03.

17%

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%0

.00

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852

99

0Pa

rts

suit

able

f u

se s

olel

y/pr

inc

w t

he

app

of h

eadi

ngs

85.

25 t

o 8

5.28

0.0

051

.64

133.

65

51.6

40

0.0

2%15

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%0

.00

6%

N

853

620

Au

tom

atic

cir

cuit

bre

aker

s fo

r a

volt

age

not

exc

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ng

1,0

00

vol

ts0

.00

20.3

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8.2

620

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09

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10%

Y

853

69

0El

ectr

ical

app

for

swit

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prot

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circ

uit

s,n

ot e

xced

1,0

00

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es0

.01

12.7

720

1.54

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620

0%

3.16

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.04

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12%

Y

853

710

Boar

ds,p

anel

s,in

clu

dg n

um

eric

al c

ontr

ol

pan

els,

for

a vo

ltag

e <

=10

00

V0

.17

52.9

532

1.6

952

.78

47.9

7%36

.28

%48

.67%

0.1

1N

Y

Page 169: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

145

853

720

Boar

ds,p

anel

s,in

clu

dg n

um

eric

al c

ontr

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pan

els,

for

a vo

ltag

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00

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.44

21.3

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4.19

20.9

542

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39.5

5%0

.90

25%

Y

853

89

0Pa

rts

for

use

wit

h t

he

appa

ratu

s of

hea

dg

no.

85.

35,8

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or

85.

37,n

es0

.01

24.4

833

7.14

24.4

66

.97%

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%34

.98

%0

.01

10%

Y

854

140

Phot

osen

siti

ve s

emic

ondu

ct

devi

ce,p

hot

ovol

taic

cel

ls&

ligh

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it d

iode

s0

.00

205.

5617

4.72

174.

72*

-19

.49

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.99

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20%

0.0

05%

N

854

370

Elec

tric

al m

ach

ines

an

d ap

para

tus,

hav

ing

indi

vidu

al f

un

ctio

ns,

n.e

.s.

0.0

324

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30.1

724

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76.2

7%22

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%4.

19%

0.2

15%

N

854

442

Elec

tric

con

duct

ors

for

a vo

ltag

e <

= 1

.00

0

V, in

sula

ted,

fitt

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ith

c0

.00

23.5

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23.5

90

28.4

3%17

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NY

854

449

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tric

con

duct

ors,

for

a vo

ltag

e n

ot

exce

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g 8

0 V

, nes

0.0

154

.04

39.7

239

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%19

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NY

854

460

Elec

tric

con

duct

ors,

for

a vo

ltag

e ex

ceed

ing

1,0

00

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es0

.04

11.1

925

9.8

911

.15

-40

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%26

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40.7

2%0

.04

NN

86

021

0Ra

il lo

com

otiv

es, d

iese

l-ele

ctri

c0

.00

95.

83

24.4

924

.49

0_*

13.4

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.00

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870

120

Road

tra

ctor

s fo

r se

mi-t

raile

rs (

tru

ck

trac

tors

)0

.00

51.5

928

.50

28.5

00

30.7

3%15

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0.0

0N

Y

870

190

Wh

eele

d tr

acto

rs n

es0

.00

23.0

99

03.

5223

.09

00

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%35

.31%

0.0

0N

Y

870

210

Die

sel p

ower

ed b

use

s w

ith

a s

eati

ng

capa

city

of

> n

ine

pers

ons

0.0

039

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259

.52

39.3

60

7.49

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.72%

0.0

0N

Y

870

321

Au

tom

obile

s w

rec

ipro

catg

pis

ton

en

gin

e di

spla

cg n

ot m

ore

than

10

00

cc

0.0

028

3.22

1,19

9.7

728

3.22

04.

74%

12.5

9%

0.0

0N

Y

870

322

Au

tom

obile

s w

rec

ipro

catg

pis

ton

en

gin

e di

spla

cg >

10

00

cc

to 1

500

cc

0.0

121

2.44

3,23

6.8

021

2.43

-5.1

7%12

.34%

31.1

0%

0.0

0N

Y

870

323

Au

tom

obile

s w

rec

ipro

catg

pis

ton

en

gin

e di

spla

cg >

150

0 c

c to

30

00

cc

0.0

016

2.0

08

35.5

216

2.0

00

13.1

1%25

.12%

0.0

0N

Y

870

421

Die

sel p

ower

ed t

ruck

s w

ith

a G

VW

not

ex

ceed

ing

five

ton

nes

0.0

06

3.43

271.

146

3.43

03.

56%

13.7

3%0

.00

NY

870

422

Die

sel p

ower

d tr

uck

s w

a G

VW

exc

five

to

nn

es b

ut

not

exc

tw

enty

ton

nes

0.0

036

.43

218

.70

36.4

30

0.2

1%24

.91%

0.0

0N

Y

870

423

Die

sel p

ower

ed t

ruck

s w

ith

a G

VW

ex

ceed

ing

twen

ty t

onn

es0

.00

10.1

69

4.8

410

.16

08

.65%

45.1

7%0

.00

NY

870

590

Spec

ial p

urp

ose

mot

or v

ehic

les

nes

0.0

028

.10

20.5

120

.51

017

.37%

24.6

5%0

.00

NY

870

829

Part

s an

d ac

cess

orie

s of

bod

ies

nes

for

mot

or v

ehic

les

0.0

049

.87

61.

3649

.87

025

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29.9

2%0

.00

NY

870

840

Tan

smis

sion

s fo

r m

otor

veh

icle

s0

.00

10.7

533

1.22

10.7

50

74.9

6%

48.7

7%0

.00

NY

870

88

0Sh

ock

abso

rber

s fo

r m

otor

veh

icle

s0

.00

11.5

69

7.48

11.5

60

34.0

5%29

.35%

0.0

0N

Y

Page 170: Pakistan Business Council...PAKIST AUTION ii Acknowledgements: Team Leader: Samir S. Amir Lead Researcher: Syed Danish Hyder Disclaimer: The findings, interpretations and conclusions

PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

146

HIG

H P

OTE

NTI

AL

IND

IAN

EX

POR

TS T

O P

AK

ISTA

N

HS

cod

ePr

od

uct

lab

elIn

dia

20

14

Exp

ort

s to

Pa

k

Pak

2014

W

orl

d

Imp

ort

s

Ind

ia 2

014

W

orl

d

Exp

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Ind

ia 2

014

Tr

ade

Pote

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al

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ia-P

ak

CA

GR

Pak

Imp

ort

C

AG

R

Ind

ia

Exp

ort

C

AG

R

Bila

tera

l R

CA

Ap

plie

d

Tari

ffSe

nsi

tive

lis

t

870

89

9M

otor

veh

icle

par

ts n

es0

.08

45.4

32,

69

6.0

645

.35

30.2

0%

-8.2

7%19

.36

%0

.01

NY

871

120

Mot

orcy

cles

wit

h r

ecip

roca

tg p

isto

n e

ngi

ne

disp

lacg

> 5

0 c

c to

250

cc

0.0

073

.83

1,75

3.42

73.8

30

5.40

%23

.23%

0.0

0N

Y

871

410

Part

s an

d ac

cess

orie

s of

mot

orcy

cles

, in

cl.

mop

eds,

n.e

.s.

0.0

056

.02

116

.19

56.0

2_*

19.6

1%_*

0.0

00

%Y

88

024

0A

ircr

aft

nes

of

an u

nla

den

wei

ght

exce

edin

g 15

,00

0 k

g0

.00

106

.16

3,43

1.0

310

6.1

60

-11.

59%

121.

95%

0.0

05%

N

88

033

0A

ircr

aft

part

s n

es0

.20

38.7

51,

250

.79

38.5

59

2.9

3%-5

.66

%41

.25%

0.0

35%

N

88

039

0Pa

rts

of b

allo

ons,

dir

igib

les,

an

d sp

acec

raft

n

es0

.00

58.7

716

5.29

58.7

721

2.49

%6

0.9

4%28

.13%

0.0

05%

N

90

158

0Su

rvey

g,hy

drog

raph

ic,o

cean

ogra

phic

,met

eoro

logi

c/ge

ophy

sica

l in

st n

es0

.00

42.8

919

.14

19.1

40

30.5

8%

15.9

6%

0.0

05%

N

90

1819

Elec

tro-

diag

nos

tic

appa

ratu

s, n

es0

.01

20.7

98

0.3

520

.78

-27.

28%

2.0

8%

19.2

8%

0.0

15%

N

90

1831

Syri

nge

s, w

ith

or

wit

hou

t n

eedl

es0

.66

15.0

136

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14.3

549

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6.0

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81

NN

90

1839

Nee

dles

, cat

het

ers,

can

nu

lae

and

the

like,

n

es1.

01

53.9

922

0.9

752

.98

28.7

0%

18.2

9%

23.9

1%0

.97

6%

N

90

189

0In

stru

men

ts a

nd

appl

ian

ces

use

d in

m

edic

al o

r ve

teri

nar

y sc

ien

ces,

nes

0.5

79

8.9

620

8.8

89

8.3

938

.56

%15

.17%

16.5

9%

0.5

85%

N

90

2139

Art

ifici

al p

arts

of

the

body

(ex

cl. a

rtifi

cial

te

eth

an

d de

nta

l fitt

in0

.16

20.4

320

.90

20.2

810

6.4

8%

30.9

2%43

.77%

1.57

5%N

90

268

0In

stru

men

ts&

appa

ratu

s fo

r m

easu

rg o

ch

eck

vari

able

s of

liq

o ga

ses,

nes

0.0

025

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

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PAKISTAN-INDIA TRADE NORMALIZATION: A WORD OF CAUTION

148

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