The Political-Economy of the South Asian Economic Union

Here is some hard analysis of the potential of Pakistani exports to India in today`s dawn.

``
Indian market offers $3bn business




By Sabihuddin Ghausi

KARACHI, Jan 3: Indian import market of more than $77 billion offers export prospects of more than $3 billion to Pakistani business given good marketing, appropriate production techniques to bring down cost and improve quality and gearing up of the entire supply chain.

In selected broad 95 categories of imported items in India, Pakistan supplies about 45 items worth only $93.5 million and there is a potential to push up exports the beyond $1 billion figure, with little marketing efforts. A further breakdown of 50 per cent of these broad categories into about 1,500 small categories being imported into India shows that Pakistan is already in business of more than 700 items.

The Export Promotion Bureau has carried out a unique and detailed structural analysis of Indian imports of the year 2003 and has compared it with Pakistan’s exports to India and to the international market. This exercise gives some idea to assess Pakistan’s supply potential to the neighbouring country where the biggest advantage is quick delivery at low freight cost compared to other countries of the world.

These promising prospects of Pakistan’s exports to India come at a time when certain bureaucrats and a few politicians are showing concern over the liberalization of Pakistan-India trade. There is a fear of Indian goods flooding the Pakistani market.

Ironically, the Pakistani market is flooded with varieties of Chinese goods that have hurt the domestic industry.

“Indian market is not of quality goods,” an analyst points out, but hastily adds that many of the 325 million middle class consumers now enjoy the advantage of global exposure and most of them are aware of the availability of quality goods and prices from other sources and hence the emphasis on quality to create a demand.

Market analysts believe that an improvement in Pakistan-India trade will have an impact on the flow of goods and services in the seven-member countries of the South Asian Association of Regional Cooperation (Saarc) and is bound to generate thousands of jobs in the region.

Informal trade between Pakistan and India is estimated at between $1.5 billion and $2 billion a year in which precious stones, sugar, wheat flour and certain selected industrial goods go to India from Pakistan, while cotton saris, cosmetic goods, ayurvedic herbal medicines, alcoholic liquor and CVDs of Indian films come to Pakistan.

Watchers of the Pakistan-India trade are convinced that a pickup in the two-way trade is bound to promote joint venture projects in both the countries that would ensure good quality goods at much lower cost than being imported from other countries in both Pakistan and India.

Mineral fuels and refinery products are the single largest category of items in Indian imports at about $22.5 billion, which is over 29 per cent of its total imports. The import of this category is showing a growth of 10 per every year, as India takes up industrial projects and brings more vehicles on the roads.

Pakistan had supplied about $39 million worth of refinery products to India in 1993. Overall Pakistan’s export of naphtha and refinery products in the world market amounts to over $296 million. Looking at these figures it is not difficult to guess Pakistan’s export potential in this area to India.

Vegetable import is other area where improvement in export prospects to India can be explored. Pakistan’s supply of vegetables to India amounted to only $12.40 million as against $46 million exports to the international market. Vegetables are value-added agricultural products and an improvement in marketing of these products in India offers all the prospects of prosperity to farmers in Punjab and Sindh.

India is a big market for precious stones for its jewellery industry. India had imported about $14 billion worth of precious stones in 1993 in which Pakistan’s share through official trade was only $426,000. Pakistan exported precious stones worth $27.68 million to the international market. A big quantity of precious stones is being transferred to India through informal channels.

Pakistan can seek Indian assistance in setting up of cutting and polishing industry of precious stones that would contribute immensely towards promoting Pakistan’s jewellery business.

Optical photo, medical apparatus and certain other items are also in demand in India for which $1.5bn were provided in 1993. Pakistan’s share in Indian business is only worth $483,000 as against Pakistan’s global export of more than $134 million.

India is also a net importer of iron and steel, iron and steel products, coal, cotton, books, newspapers, a few varieties of textile products, confectionary items and a host of other varieties of goods which can be identified by the chambers and trade associations for exploring export prospects.``

HisExcellency #68

`` With India, SAFTA will just be a D!*K that will screw the remaining six member states. It will be a South Asian disaster. ``

There is no compulsion in getting screwed :-)

#71 by dost-mittar on January 4, 2006 9:10am PT


This assumes that India needs such a union more than the smaller states in SAARC.


Pakis want India to offer them a cake(Kashmir) as an incentive for them to eat the candy(trade)..


India does not need a political or even an economic free trade zone.


Your dealing with the basic paki self-delusion of indespensibility....Pakis think India needs to trade with a market 10 times smaller than it`s own..just exactly why, they won`t say..just exactly what Pakiland has to offer, they won`t say..


It has large enough market and is more advanced than other countries in terms of economic, educational and industrial infrastructure and has an abundant supply of both cheap and skilled workforce.


there you go again...citing inconvenient FACTS...what`re you? the usual paki hating/muslim hating hindu fanatic ?

Dear Osama:

``Can India really prove themselves worthy of leading a group of skeptical countries without actually making them feel that they are being led? Can India show the kind of magnanimity befitting of an emerging super-power that has no insecurities about its new-found status--and hence no need to assert it--that would be required of an anchor country to make SAFTA/SAEU a success?``

I found myself agreeing with most of your article until I came to this piece. Frankly, this is a non-starter. This assumes that India needs such a union more than the smaller states in SAARC. If you have made such a case, I have missed it. That a large country like India should behave generously towards its neighbours is a given, which can stand on its own without the case for a larger political entity. This was the well-known Gujral doctrine, enunciated by I.K. Gujral when he was the Foreign Minister of India.

India does not need a political or even an economic free trade zone. It has large enough market and is more advanced than other countries in terms of economic, educational and industrial infrastructure and has an abundant supply of both cheap and skilled workforce. It`s more interested in gaining access to even larger markets, such as China, Asean, EU and North America. At the present time, all it needs are win-win type arrangements with neighbouring countries for normal transit of goods and servieces, such as are being discussed for the Iran-Pakistan-India gas pipeline or the transit route to Afghanistan and Central Asia through Pakistan which benefits both India and Pakistan.

The countries of the region are certainly not ready to have a larger common political entity. In a region where one country accounts for an overwhelming weight, as is the case with SAARC, it would require the smaller countries to accept a tacit recognition of the larger country as a Big Brother which would, in turn, impose the kind of responsiblity on the larger country that you talk about. India should do everything to deal with those insecurities if they are grounded on facts and nothing if they are based on irrational insecurities. If the Big Brother starts to behave like a Big Bully, the whole arrangement would naturally come crumbling down.

How about free-trade inside of India and Pakistan. Nice to remove strange tarrifs and octrois and make railway transport more rational in india. pakistan can take care of baluch gas royalties and more equitable deal to non-panjabis.

Pakistan has nothing to offer. It`s not like they have an Infosys or a Wipro, companies busy buying up assets in the west, that can invest on the other side of the border. Pakistan has almost no company that can hold it`s own in the world.

Like the dawn article said, the pakis are also worried because their own industry is not competitive.

re: #35 rsridhar
``SAFTA without India will be like a man without his D!*K. It will be impotent``

With India, SAFTA will just be a D!*K that will screw the remaining six member states. It will be a South Asian disaster.

Kids, time-out. Can we get back to discussing the article please.

re:#60 by faisaluno
May be garbage from India can be exported to Pakistan. I am sure this is a lucrative market.
Sridhar

monkey see, monkey (try to) do..monkey no-can-do



Govt to train IT professionals in niche areas

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari on Tuesday said the government was willing to fund capacity building and training of any number of professionals in any specific area required by the telecom and IT industry in the country.

Seriously...what is India missing by not trading with jihadi-infested countries? and why does India need to concede anything to Pakiland?

Stephen King: China and India leaving G7 nations in the slow lane
Published: 03 January 2006

Three big issues are likely to dominate the economic landscape in 2006. The first, and most obvious, is the rapidly evolving role of the fast-developing countries in Asia, particularly China and India.

The second, a demand-related story, is the relationship between monetary policy and economic growth. With US short-term interest rates likely to move above US long-term interest rates, the US yield curve is threatening to invert, a development that has sometimes, although not always, signalled the onset of recession.

The third issue is more a supply-side story with specific resonance for the UK: despite low inflation and stable economic growth, the UK`s productivity performance seems to be steadily deteriorating, a development that is hardly encouraging for the longer-term health of the UK economy.

Let`s take the China and India story first of all. The distribution of economic growth around the world in 2005 contained quite a few surprises. Those surprises, though, did not emanate from the West: US and eurozone growth rates came in broadly in line with consensus expectations at the beginning of last year.

China and India offered the really big shocks. Both of them delivered growth rates over 1 per cent higher than expected. Their strength is leaving the G7 nations behind in the slow lane of economic growth. Some 15 years ago, the G7 nations accounted for 70 per cent of global GDP: today, they account for only 62 per cent.
...
Stephen King is managing director of economics at HSBC

given a choice, i would rather be an east pakistani than chowk`s pagal kutta in residence.

#61 by ranjit on January 3, 2006 11:39am PT

faisaluno isn`t a real pure pakistani..he`s a former east pakistani(as in the pakistani army killed a bunch of them in 71)..
he has to do his best to prove his paki credentials..

Re:arjun_m#59

Indeed!! We hear Pakistanis come to India for all kinds of medical treatment, operations etc. We have seen stories of Pakistani kids getting eyesight back and heart operations. A lot of times, Indian medical facilities do not even charge Pakistanis or give them a huge discount.

After that it is extremely upsetting to see people like faisaluno bad-mouth India. That is really disgusting, ungrateful behavior.

joke is`nt funny any more.

problems with lack of hygiene are way more serious than previously thought. we are talking about millions of people here:

http://www.indianexpress.com/full_story.php?content_id=83783

No one to weep for Mumbai

Farah Baria

...clogged with 7,800 tons of festering garbage, infected by 27,682 cases of jaundice, typhoid, gastro, dengue and malaria, asphyxiated by toxic pollution, dehydrated by a severe water deficit, blinded by a 1,500 megawatt power crunch, constipated by a toilet to person ratio of 1:50, and populated by 7 million migrants who live in sub-human slums, the city’s prognosis is bleak. And its epitaph has already been written: a recent survey by the Economist listed Mumbai as one of the world’s most unlivable cities, and consigned it to a global terminal ward, along with Dhaka, Abidjan, and Bogota.

The end has been evident for over a decade. Long before July’s cataclysmic downpour, India’s most vivacious metropolis has been enduring a slow, insidious death.

...As for you and me, it’s back to dodging potholes, sidestepping broken pavements, circumventing decomposing refuse, commuting like slaughter house animals, waking up at ungodly hours to fill our buckets before the municipal pipelines run dry, drinking jaundiced water, hoping against hope that our kids don’t catch malaria from exposed sewage pipes, and watching shanties come up for free outside our windows while we sweat to pay off an astronomical loan for a home that may collapse the following monsoon.

...And that’s why, when the end inevitably comes, there will be no one to weep at Mumbai’s funeral.

#58 by faisaluno on January 3, 2006 10:37am PT

How bad are things in Pakistan that paki have to come to India for medical procedures...India with it`s poor standards of hygiene and all..

How come we hardly hear of any Indian going to Pakistan for medical treatment?