India, Pakistan launch talks to boost ties

The commerce secretaries of both countries would discuss over two days a blueprint for eliminating trade barriers and forging closer business cooperation, which has suffered due to decades of political hostility.

Direct bilateral trade stood at 300 million dollars in the 2003-2004 fiscal year but officials said unofficial trade was more than double that.

"It is our misfortune that political circumstances resulted in us having to limit and constrain the spirit. Fortunately, things are changing," Indian Commerce Minister Kamal Nath told the first meeting of the joint study group on economic cooperation.

The joint study group is aiming to draft a comprehensive economic agreement spanning trade in goods and services, investments and a policy framework.

"We have come to India with great expectations and an open mind. The trade between the two countries has not achieved its potential. We have to try and push this further under this process," said Pakistan's Commerce Secretary Taslim Noorani.

India and Pakistan have launched a series of matching steps to build people-to-people contacts, the latest of which was a decision to run a bus service across the two sides of the Line of Control, the de facto border dividing the disputed Kashmir region claimed by both countries.

Nath said economic cooperation would give a push to peace and prosperity in the entire region.

"Today, we find that the mood amongst our business communities is positive, with a high degree of expectation that both the governments would create an environment which would facilitate economic growth," he added.

Businessmen from the two sides have been sourcing goods from third countries, even though they can buy goods from each other at much lower costs because of the geographical proximity.

"The first step is for us to exploit the complementaries between our economies. We must identify those goods which are sourced from third countries, but which we can source from each other," Nath said.

"If in any case we are importing these goods from third countries, then why should we hesitate to rather import them from each other?" he asked.

Industry officials said official trade could cross one billion dollars if businesses in both countries sourced goods from each other.

India's exports to Pakistan during the first half of the financial year ending March jumped 256 percent to 246.32 million dollars from 69.16 million dollars in the corresponding period a year earlier.

However, bilateral trade accounts for less than one percent of the neighbours' combined transactions with the rest of the world.