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India-Pakistan visa deal: a glass half empty? September 14, 2012

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Sandy Gordon

On September the 8th, India and Pakistan agreed to liberalise their visa arrangements. The deal came during three day talks between Pakistani foreign minister Khar and Indian counterpart Krishna at Islamabad. Under the deal eight categories of visa will be liberalised, including the provision of visa on entry at the land border for the elderly and young, and most importantly, the provision of multiple entry and multiple city visas for business people with turnovers of over Rs 3 million annually.

The latter is particularly significant in view of recent trade developments. These include Islamabad’s decision to grant most favoured nation (MFN) status to India – which had been granted by India to Pakistan in 1996.  Pakistan has promised by December this year to grant MFN to India by eliminating the system allowing only stipulated items to be traded in favour of a small ‘negative’ list covering defence-related and other sensitive items. India has also liberalised its regime by agreeing to remove yarn and textiles from its ‘sensitive’ list and allowing Pakistani businesses to set up in India.

India sees such developments as consistent with what Krishna refers to as its “step-by-step approach” to the relationship.  India has for many years held the view that this is the best way forward, rather than pushing for dramatic developments in relations, for instance over Kashmir.  New Delhi believes that a Pakistan more solidly stitched into the Indian economy is more likely to abjure the highly disruptive tactics in support of trans-border terrorism that have been witnessed from Pakistan in recent years.  India is also keen to support what it sees as the delicate process of civilianising the Pakistani polity, consonant with its belief that it has been the military – and especially the ISI – that has been most heavily engaged in supporting terrorism.

The step-by-step approach is also seen by New Delhi as being consistent with its persistent demand that Islamabad do more to bring those responsible for the attacks of 26 November 2008 on Mumbai (26/11) and other attacks on India to justice. For India, this is the ‘bottom line’ in terms of achieving any significant breakthrough in relations. On its part, Islamabad claims that it doesn’t have sufficient evidence to progress the cases. The issue is complicated by the arrest in India of ‘Abu Jundal’, an alleged planner of the 26/11 attacks, who has claimed under interrogation that the ISI was involved – a claim similar to that made by David Headley, another Lashkar-e-Taiba operative associated with the attacks, made during his trial in the United States.

Indian Prime Minister Singh is scheduled to visit Islamabad some time before the Pakistani election, scheduled to take place in Spring next year.  But so far New Delhi has not committed to a date, saying the visit would need to achieve something significant, probably in reference to a breakthrough on terrorism.  Such a breakthrough is currently unlikely. Even if the civilian government wished it, the military remains attached to its ‘tame’ terrorist groups like LeT and the Haqqani Newtork as a potentially useful ‘force de frappe’ in the context of Kashmir and Afghanistan.

The outcomes in trade too may be slow and painful to realise.  Trade between India and Pakistan is currently minimal at US $2.7 billion. According to the Wall Street Journal, even with MFN, non-tariff barriers such as onerous labelling provisions and lack of trade facilitation at borders are likely to keep trade low for some time.

Meanwhile, Chinese goods are flooding in to Pakistan under its MFN arrangement with Beijing. India also faces challenges from Chinese manufacturing.  Nor are the Indian and Pakistani economies particularly complimentary. Even with the best will in the world – which is currently lacking – progress will be incremental.  Where there could be greater trading traction, however, is at the local level between the two Punjabs, both of them dynamic sub-regions of their respective economies.  Niche items like Pakistani light cotton products for women’s fashion, which could prove popular in India just as they have in Pakistan, could also benefit from the new regime.

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1. India−Pakistan visa deal: a boost for trade and bilateral cooperation? | East Asia Forum - September 25, 2012

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