Table of contents list of acronyms
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| 8. TRADE WITH INDIA The trade complementary between Pakistan imports and Indian exports in the automotive sector is high at 0.836 (maximum of 1). Potential imports of Pakistan from India include tractors, buses, cars, trucks, vans and autoparts. 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. Also, 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 depends on how the monopolistic behaviour of the Pakistani business organisations responds to this – will prices be reduced 77 percent of the vendor survey units had a negative perception of trade with India, namely, that low cost Indian manufacturers enjoying economies of scale could enter the Pakistani market. Some vendors responded positively citing two factors one, the possibility of joint franchise production and two, the opening up of a large export market in India. Because of the uncertainty in the impact on the domestic market after India gains the MFN status at the end of the year, the process of tariff rationalisation recommended above maybe withheld for one year and reexamined thereafter. However, to ensure that the domestic manufacturers/assemblers start gearing up to achieve global competitiveness the government should provide all support necessary to acquire technology and skills to improve quality, promote competition and increase the utilisation of capacity. The bottom-line is that the automotive sector is a potential growth sector, which needs to be developed through an appropriate policy and enabling framework. |