New Delhi: India and Pakistan are expected to take a major step in normalizing trade relations during a four-day visit by India’s commerce minister Anand Sharma to Pakistan, the first time an Indian minister will visit the country for bilateral trade negotiations starting Monday.

India expects Pakistan to announce a transition from a positive list-based bilateral trade to a negative list-based trading system, which only lists sensitive items that will not be imported from India. Currently, Pakistan allows the import of only 1,900 items from India.

Ongoing negotiations: Commerce minister Anand Sharma says India will reduce the peak tariff on imports from Pakistan to 5% from the current 8% by the end of the calendar year. Photo: PTI

Following a series of measures announced by the two sides during a visit by commerce secretary Rahul Khullar to Pakistan in April, Pakistan’s cabinet cleared the proposal empowering its commerce ministry to grant MFN status to India in November.

Khullar said there are concerns in Pakistan that if a transition is made from the present positive list-based trade system to the MFN regime, some industries in Pakistan will be affected because of a sudden influx of imports.

“It is a conscious decision to have a sequenced approach to MFN. First, Pakistan will move to a negative list-based trading system and that list will be dismantled by the end of the year,” Khullar told reporters in New Delhi.

“There is every reason for us to believe that there is an expressed wish and desire on part of Pakistan...to move to the (negative list) regime, which deepens and diversifies trade and enhances economic engagements,” trade minister Sharma said.

On the progress in moving to a multiple-entry visa regime, Sharma said there will be a discussion on that. “Both the governments have talked. The drafts have been exchanged. We are in favour of an early conclusion of signing of an agreement for a multiple-entry visa regime to facilitate the movement of business leaders of India and Pakistan as part of the process of normalization,” he said.

Sharma said India, on its part, will reduce the peak tariff on imports from Pakistan to 5% from the current 8% by the end of the calendar year.

Nisha Taneja, a professor at the Indian Council for Research on International Economic Relations, said the visit by the Indian trade minister itself shows that India is serious about bilateral trade talks. “India is making a statement while the world is watching the trade talks,” she said.

On Pakistan’s complaint about trade barriers being raised by India, Taneja said the barriers are mostly perceived as there is not enough understanding of how Indian regulations work in Pakistan. “There is an information gap. But even if the barriers are perceived, they need to be addressed,” she said.

Sharma is leading an inter-ministerial group comprising officials from home and external affairs other than his own ministry. A business delegation of more than 120 people is accompanying him.

Official bilateral trade between India and Pakistan stands at $2.7 billion, while indirect trade through the Gulf countries is manifold. India expects to double its trade with Pakistan in the next three years.

Sharma will inspect the progress on the construction of a second gate of the integrated checkpost at Wagah along with his Pakistan counterpart Makhdoom Amin Fahim. Sharma said the work for the new checkpost that was scheduled to be completed by October has been delayed. Sharma will also attend the South Asian Association For Regional Cooperation (Saarc) ministerial in Islamabad on 16 February.

On Saturday, the “India Show” was inaugurated in Lahore by Pakistan trade minister Fahim. The show was attended by more than 400 Indian exhibitors.

Sharma will travel to Karachi on Tuesday to address a business conclave along with Pakistan commerce minister. Sharma will hold bilateral talks with Fahim on trade-related issues in Islamabad on the next day.

The ministerial talks will cover issues including the steps taken by Pakistan for granting MFN status to India, progress made on strengthening infrastructure for cargo movement through the land route, customs cooperation, and mutual conformity of standards and grievance redressal.

“The investment policy regime of India, which currently prohibits Pakistan investments into India, is also likely to come up for discussion,” a statement by the Indian commerce minister said.

Sharma is also expected to meet Pakistan Prime Minister Yousaf Raza Gilani and President Asif Ali Zardari.

asit.m@livemint.com