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جمعہ، 3 اگست، 2012

The trade diplomacy

The Indian government has lifted the curbs it had placed on Pakistanis investing in India, causing Pakistan Foreign Office to welcome the step even though business circles warned that this would increase the flight of capital from Pakistan.

Reversing a ban on Wednesday, India allowed foreign investment from Pakistan to "build goodwill" amid a renewed push for peace, is all but a tricky business because New Delhi expects Pakistani bourgeoisies will show no hesitation in positively responding to the offer. Defence, space and atomic energy will, however, remain out of Pakistani investors domain in addition to a Reserve Bank of India's Pakistan-specific regulation that the Indian companies could not invest in Pakistan. This makes the Indian offer clearly one-sided with no additional benefits to Pakistan and Pakistanis. No doubt the atmosphere for industry and business is not conducive owing to energy crisis, political uncertainty and other factors in the country and Pakistani investors have moved to Bangladesh, Sri Lanka and Middle Eastern and African countries, extra caution should be demonstrated while investing in India because New Delhi avidly aims at running away with sensitive issues, such as Kashmir and building of dams on Pakistani rivers. The decision to accept investment from Pakistan was taken in April this year when the trade ministers of the two countries met in New Delhi and also discussed easing visa restrictions on business travel and the possibility of allowing banks from both countries to open cross-border branches. New Delhi has said that the improved relations between the rivals stemmed from Pakistan's decision to grant India 'most favoured nation' status by the end of the year. In further progress, the neighbours opened in April a second trading gate along their heavily militarised border, boosting the number of trucks able to cross daily to 600 from 150. India also said the move was essential to engage Pakistan for the South Asian Free Trade Agreement. The Indian offer comes at a time when Pakistan is witnessing a plunge in foreign investment as, according to a State Bank of Pakistan report, foreign investment in the country fell 65.6 per cent to $680.4 million in the year ended on June 30 from $1.98 billion the previous year. But the offer may be seen in the background that New Delhi, like the whole world, failed to respond to a Pakistani incentive for local and foreign investors to invest on the basis of cent per cent ownership of businesses and repatriate capital and profit.

The offer is mainly aimed at India harvesting the crop of profit from Pakistani investors. Allowing individuals and corporates to move capital out of Pakistan was scarcely a step to applaud when the country itself need big foreign inflows to boost its economy and bolster external balances. If India is really sincere in Pakistan's economic face lifting, it should remove the ban on Indians investing in Pakistan and make the offer mutually beneficial because attracting Indian investment into Pakistan, rather than siphoning off already depleting investment from Pakistan to India, is what we need right now.

The Pakistan government must ensure that India eliminates the non-tariff barriers it has erected, and which are the secret of its surplus with Pakistan as well as other countries, and while it must be ready for equitable trade, it must not do the wrong thing for the wrong reasons. If India was to see that Pakistan was a sovereign country, willing to make trade agreements only with those who paid attention to its national interests, it would be more careful.

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