Indo-Pak trade relations have long been adversely affected by a flip-flopping policy. The visit of India’s Commerce Minister Anand Sharma to Islamabad, the first such visit since 1947, made considerable headway. The Pakistan Cabinet did not of course make a landmark announcement on trade liberalisation with India. All parties had not been in agreement so far. India has been negotiating an ambitious agenda with Pakistan and Pakistan’s civilian government has long been enthusiastic. The hurdle was that there could be no normal trade relations between the two countries until the Kashmir issue was settled. The Asif Ali Zardari government was inclined to waive this condition and Pakistan agreed in principle to grant Most Favoured Nation status to India last year. New Delhi was not unaware of the political and other obstacles. The Pakistan army created no problems but extremists in the country started an aggressive campaign against it. Some Pakistani businessmen were afraid that free flow of trade would lead to their market being swamped by Indian goods.
During the recent meeting between the Commerce Ministers of the two countries, Pakistan agreed to liberalisation of trade with India. Imports will be restricted for only a small list of goods. New Delhi and Islamabad will adhere to a roadmap for full normalisation of trade. Pakistan is committed to grant MFN status to India in a phased manner by the end of 2012. Rules to debar FDI from Pakistan in India may be relaxed. Delhi on its part has to keep its side of the bargain, dismantling all non-tariff barriers and focusing on a mutually beneficial economic partnership. Anand Sharma’s visit to Pakistan has been successful in offering a package of reassurances.