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Pakistan's textile ministry seeks wider access to India

Pak textile ministry has demanded that homegrown producers be given wider access to the Indian market before allowing goods from across the border.

, ET Bureau|
Last Updated: Feb 21, 2012, 06.16 AM IST|Original: Feb 21, 2012, 03.06 AM IST

NEW DELHI: Pakistan's textile ministry has demanded that homegrown producers be given wider access to the Indian market before allowing goods from across the border. But India is not ready to grant special concession to Pakistani textiles until Islamabad switches over to a negative list of imports, considered the first step towards granting India most favoured nation status, according to a commerce department official.

Last week, Pakistan's textile ministry blocked a Cabinet proposal for replacing the restrictive positive list import regime with a negative list of 636 items that would have increased import of items from India four-fold. It argued that all industry groups were not consulted before framing the Cabinet note. "We have not bent any rules in our trade dealings with Pakistan. We may consider individual problems of particular sectors, but for that to happen the trade process has to be normalised first and we have to get MFN status," the official told ET.

Commerce minister Makhdoom Amin Fahim, however, promised in his joint bilateral statement with his counterpart, Anand Sharma, that Pakistan would stick to the schedule of moving to a negative list in February and giving India the MFN status by the year-end. "We hope to finish our consulations on the negative list soon," Fahim told media last week.

India gave MFN status to Pakistan by allowing import of all items in 1996 as mandated by the World Trade Organisation. Pakistan allows import of just 1963 items from India against almost 9,000 items from other countries. Pakistan's textile ministry claims that access to the Indian market is heavily restricted as it imposes high specific duties on some items, such as a 300 levy on some categories of shirts.

"If one translates the specific duties into duties based on value, it would be as much as 70%, which is totally prohibitive," a Pakistani government official told ET. According to the official, Pakistan is the only textile producing Saarc country that India was discriminating against. Bangladesh was recently given duty-free access to 48 apparel items, including gents shirts, jeans and knitwear. Sri Lanka, too, has preferential access for its textile items under its free-trade agreement (FTA) with India.

"Since the South Asia Free Trade Agreement (Safta) has only Pakistan and Sri Lanka as non-LDC members, India maintains stringent rules for non-LDC members," the official said. The Pakistani textile ministry told its cabinet that Islamabad exported $45 million worth of textiles products to India in 2010 while New Delhi exported $566 million worth of textiles. India's overall exports to Pakistan in the previous fiscal were around $2.4 billion while its imports from the country were worth $350 million.

"We have no clue why the textile ministry is acting tough, especially when it has been decided that once we get MFN status, both would lower tariffs under Safta. The country's textile industry would automatically get more access then," the Indian official said.

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