The Union Cabinet on Thursday cleared the commerce department's proposal to reduce the sensitive list of items under Safta for Pakistan by 30% subject to reciprocity conditions which also include a similar pruning of list by Islamabad.
"The Cabinet has agreed to reduce the sensitive list for Pakistan by 30% but there are conditions attached," a commerce department official told ET.
This could be viewed as a stiffening of stand by New Delhi which had earlier agreed to cut down its sensitive list within four months of Pakistan dismantling its positive list of import from India in favour of a negative list. Since Islamabad moved to a negative list of imports with India that allows import of all commodities barring 1209 products on March 31, New Delhi was supposed to reduce the Safta sensitive list by July-end without other conditions.
However, with Pakistan not making any further moves to dismantle the negative list to establish normal trade relations with India by the year-end as promised or allowing greater trade via the land route, New Delhi cannot be criticised for making its gesture conditional.
India allows imports of all goods from Pakistan.
"We are not averse to giving greater market access to Pakistan by lowering tariffs, but we also want meaningful market access in return," another government official said. Pakistan allows only 137 items to be imported through the Attari land route. The rest has to go via the sea route to Karachi through Mumbai and Dubai, which makes exports largely unviable. India has been asking Pakistan to allow all goods to be traded through land, but is yet to get a positive response.
Islamabad has also not stuck to the agreed plan of a gradual reduction in its negative list so that it is phased out by the year-end.
The two countries embarked on a trade normalisation programme early last year which resulted in fast-paced liberalisation of trade and investments, but the process slackened over the past few months due to the political turmoil in Pakistan.
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