Pakistan-India Trade:

Additional Trade Challenges: Transport, Transit, and Non-Tariff Barriers
granting visas are some of the restrictions that have limited market access
for aspiring traders (Taneja 2011).
Consulates in both countries have exercised tremendous discretionary
powers in granting visas and waiving visa requirements. Consulates
have allowed some traders to be exempted from scrutiny by the Ministry
of Home Affairs in India and Ministry of Interior in Pakistan. They
have also extended the length of stay; exempted traders from police reporting;
and removed restrictions on the number of cities to be visited.
Selected traders who are beneficiaries of such largesse make repeated visits
and have access to trade-related information. On the other hand, lack
of transparency, market imperfections, and information asymmetries
raise transaction costs and restrict market access for several other aspiring
traders. Indian officials argue that, for the sake of security, rigorous
screening of visas is essential. While it is true that no compromise can be
made on national security issues, it needs to be recognized that genuine
traders often become victims of a strict visa regime.
In October 2011, India and Pakistan finalized the draft text of an
agreement for streamlining visa procedures between the two countries,
and was submitted to the respective governments. Nearly a year later,
in September 2012, the two capitals concluded an agreement that loosens
visa requirements in both countries. There is no doubt that a more
liberal visa regime can provide an effective channel for information exchange
on trade-related matters between the two countries.
reCoMMendaTions
The trade normalization process is expected to unleash huge trade opportunities
for India and Pakistan. However, for this trade to be realized,
several measures need to be undertaken by both countries. Two concrete
steps that have been taken since the commerce secretary-level talks are the
phasing in of MFN and the setting up of modern infrastructure facilities
at the Attari/Wagah border on the Indian side. If infrastructure is not upgraded
on the Pakistani side, the full benefits of improved infrastructure
cannot be reaped. Doing away with the positive list on the road route will
bring about a quantum jump in trade at considerably lower costs. Other
measures that need to be taken to increase trade on the road route include
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