parts made in Pakistan were improved, the potential for export to other countries

98
Pakistanis set to granting MFN status to India by end 2012. This will, no doubt, contribute to an increase in Indo-Pak trade. Various authors have all concluded, by adoption of different approaches, that the potential volume of trade is a large multiple of the present volume of trade. Little attention has, however, been given to trade at the micro-level. The State Bank in its report suggest that the Indian automobile sector enjoys some considerable advantage over
Pakistan’s. The latter enjoys economies of scale, uses state of the art technologies and processes and has continuously enjoyed state patronage through consistent policies. Exports by the sector from India were about US 11 billion in 2010-11 with a surplus of US 7 billion. Within the region, significant exports are to Sri Lanka, Bangladesh and Nepal. Major export markets in East Asia are Indonesia, Thailand and Philippines. India has also penetrated the African market with exports to Nigeria and Egypt, and to countries in Latin America including Chile, Argentina and Peru. This is in addition to the traditional markets in Europe and the USA. The Indian Tata trucks area byword in the Middle East, Afghanistan and Iran. The index of Pakistan import and Indian export trade complementarity is high at 0.836. Potential imports of Pakistan from India include tractors, buses, cars, trucks, vans and spare parts. Therefore, all major imports of Pakistan could potentially be obtained from India. The trade index in the reverse direction is low, implying that Pakistan would face an uphill task in exporting to India. Landed prices of most Indian automobile products are close to domestic prices and, therefore, could compete favourably with Pakistani products. What might happen after MFN status to India would depend on how the monopolistic behaviour of the Pakistani business organisations responds to this – will capacity utilisation increase, the supply-demand gap reduced and market behaviour adopts proactive methods
77 percent of the survey units had a negative perception of trade with India, namely, low cost Indian manufacturers enjoying economies of scale could enter the market and drive local producers out. On the other hand 47 percent responded positively citing two factors one, the possibility of joint franchise production and two, the opening up of a large export market.

Download 0.77 Mb.

Share with your friends: