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LIKELY PATTERN OF INDO-PAK TRADE
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| 9.3. LIKELY PATTERN OF INDO-PAK TRADE The scope for trade in the automotive sector between India and Pakistan has not materialised because of restrictions imposed historically by Pakistan. The Positive List of imports from India virtually ruled out the possibility of significant supply, albeit cheaper, from India. Section XVII on Vehicles & Transport Equipment of the HS, which includes chapters 86 to 89, has 245 tariff lines. The Positive List included only 15 tariff lines from Section XVII, and that too items of only marginal importance. 88 Even now, the recently finalised Negative List of imports includes as many as 198 items. Therefore, even though the general scope for trade with India has expanded greatly, following the transition from the Positive List to the Negative List, this is not the casein automotive products. If the Negative List is fully withdrawn on st December 2012 and MFN status given to India, then the prospects for trade could improve greatly. The analysis of trade complementarity in the sector undertaken in the previous section has revealed that there is a close match between Pakistani imports and Indian exports. Therefore, the scope of trade diversion to India are large. But given the present level of import tariffs on automotive products in Pakistan will Indian products be able to compete in the domestic market Table 9.7 derives the likely landed prices of Indian products given the fob. export price currently plus cost of insurance and freight plus duties and sales tax. It appears that Indian exports are competitive in a number of items, including the following Cars cc – cc Cars ≥ cc Goods vehicles < 5 tons Landed prices are close to domestic prices in the case of the following items: Buses AC > 13 persons Cars < 1000cc Motorcycles 75-250cc Therefore, the actual outcome will depend upon the extent to which Pakistani producers are willing to reduce their prices in the face of competition from India and/or Indian suppliers’ motivation to reduce their prices somewhat to penetrate the Pakistani market. We have the clear conclusion that at the present level of import tariffs, Pakistani manufacturers are barely competitive with Indian exports in many automotive products. Download 0.77 Mb. Share with your friends:
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