LAHORE - India has one of the most restrictive trade regimes in the world, according to the World Trade Organisation (WTO).

Economists and WTO experts, quoting an annual report of the WTO, stated that the Indian government around seven years back initiated 191 safeguard actions compared to just 171 by China, a much larger economy. In fact, this was even higher than the number of actions initiated by the EU, also a much larger economic bloc.

And a new study conducted by the United States Agency for International Development (USAID) has revealed that India stands at the top in South Asian countries on the basis of trade restrictions imposed on neighboring countries, according to criteria set by the World Bank.

Experts pointed out that India is accused of using both tariff and non-tariff barriers to discourage imports from neighboring countries. It is no surprise, then, that trade between India and Pakistan is so skewed right now. The volume of trade is growing, but not in a way that seems to be of any real benefit to Pakistan. In 2006-07, Pakistan exported goods worth $342.9 million to India, against imports of $1.24 billion. In 2010-11, Pakistan’s exports to India had dropped to $264.3 million, while imports from India had surged to $1.74 billion.

Giving an example, sources said that if the MFN status is granted to India without completion of infrastructure at the Wagha border, the prices of goods coming from India, will double due to the choking of trucks and the purpose of cheaper goods supply to people will not be served.

Experts maintained that a level playing field must be created for Pakistan’s textile products relative to Indian products through implementing a uniform tax regime before the MFN status is granted to India.

The negative list lays restrictions on imports of 1,209 items from India, which includes 78 textile and apparel items. Pakistan’s farmers fear that there is not a single agriculture item on the negative list or the sensitive list of Pakistani imports from India, except Tobacco and its different forms.

Insiders claim that phasing out of the negative list or MFN status to India will not have any negative impact on Pakistani agriculture as only one item, i.e. Tobacco will suffer from the grant of MFN status to India.

Pakistan will have to be mindful of the pitfalls of allowing completely unfettered and unhindered imports from a much larger and much more developed economy. The USAID report suggests that Pakistan should actually enhance the sensitive list to protect the local industry and agriculture sector following granting MFN status to India.

This year will see some major shifts, with some local industries having to suck it up and see the end of their life inside the bubble of protectionism. This will bring benefits for the local consumer, who will have access to more choices and cheaper products.

But it will also bring in threats to other industries which do not have the same benefits, or are as developed as their counterparts in India.

For a long time the governments were always lacking political will to grant Most Favoured Nation (MFN) status to India but industrialists, traders and civil society activists continued to advocate increasing trade with India, saying this would be a great way to forge better relations and solidify peace overtures between the two nations.

Currently the trade volume between India and Pakistan is about $2.5 billion and it is expected that this can be enhanced to $8 billion in the next two years.