Bilateral trade: Industry wary as govt prepares to give market access to India

Export of Pakistan’s cement, which has a huge demand in the Indian market, has dropped due to the non-tariff barriers. ILLUSTRATION: JAMAL KHURSHID.

LAHORE: 

At a time when dialogue with India to boost trade ties is one of the top priorities of the government, the industries have once again strongly objected to opening the country’s market for Indian companies, as Islamabad gears up to grant non-discriminatory market access (NDMA) to Delhi.

Following the Indian Show in Lahore starting February 14, the government may offer NDMA to India, a more open status than the Most Favoured Nation (MFN) status.

“In a recent meeting with leading businessmen of the country, Commerce Minister Khurram Dastgir shared privately that they have decided to accord NDMA status to India without demanding reciprocal facility from the Indian side,” said a source present in the meeting.

“This announcement will be made when a high-powered delegation of Indian diplomats, politicians and businessmen visits Lahore next week.”

The pharmaceutical industry is one of those at the forefront in raising voice against the opening of Pakistan market. The MFN or NDMA status may bode well for other industries, but for the pharmaceutical sector it will be disastrous on many counts, it says.

The industry believes that it will completely nullify the heavy investment and technology transfer that have taken place so far, destroy the employment base of four million people, pave the way for foreign pharmaceutical companies operating in the country to shift their plants to India and make the country fully dependent on the neighbour.

“The onslaught of cheap, substandard Indian drugs will force the pharmaceutical industry to close down and in the long run Pakistan’s 180 million people will be held hostage to Indian politics and industry, which is known for shutting down the peace process,” said Asif Akhai, Chief Executive of Akhai Pharmaceuticals.

Sharing his views on NDMA, Akhai said “the first and foremost issue concerns the quality of Indian drugs. Since we don’t have a vigilant regulatory framework, it would be really difficult for us to completely check the quality of Indian drugs. Any spurious products could result in a big mayhem. So we have to have effective and standard regulatory frameworks before even thinking of giving access to Indian companies.”

Meanwhile, export of Pakistan’s cement, which has a huge demand in the Indian market, has dropped in the first six months of fiscal year 2013-14 due to the non-tariff barriers (NTBs) imposed by Indian authorities despite all the efforts of the PML-N government to smoothen and enhance bilateral trade, industry sources say.

Statistics revealed that cement exports to India stood at 786,672 tons in 2007-08, which steadily dropped to 482,215 tons in 2012-13.

Talking about the stance of the auto industry on trade with India, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Usman Malik said the dynamics and economies of scale in both the countries were quite different.

India manufactures around two million vehicles a year while Pakistan produces just 150,000 vehicles. Furthermore, the law and order situation and scarcity of utilities mean there can’t be a level playing field for the two.

Moreover, Pakistan’s auto industry was not prepared for the phase-out of the negative trade list as the government had not carried out administrative and organisational changes in the internal systems to prepare for the Indian challenge, he added.

Malik suggested that the authorities should be careful about taking such decisions and this was definitely not the right time. Indian NTBs were unreasonable and unfair and this was the reason Pakistan’s exports were nominal despite being awarded the MFN status years ago, he said.