Islamabad: The Pakistan government has signalled its readiness to allow Indian investment in various sectors by unveiling measures to encourage India-based firms to set up units in the country for making buses run on compressed natural gas (CNG).
In a significant shift in stance, Pakistan unilaterally included measures in its new trade policy to encourage Indian investment for manufacturing CNG buses. The measures allow the import of test consignments of CNG buses by any Indian manufacturer who makes a firm commitment to set up units in Pakistan.
Eco-friendly: A CNG bus in New Delhi. Pakistan has approved import of such buses from India.
An official in the board of investment told the Dawn newspaper there is no law that could bar Indian investment in Pakistan.
Pakistan has a liberal investment policy, but the official said both countries generally discouraged bilateral investments. Through the move on the CNG buses, the Pakistan government has signalled its readiness to “embrace Indian investment in other sectors,” the official said.
The Pakistan government has invited at least three Indian business conglomerates — Tata, Reliance and Essar — to a meeting of potential investors in the power sector to discuss the development of the Thar coal power project. The meeting is due to be held in late July or early August.
Pakistan’s efforts at liberalizing trade with India are in line with ruling Pakistan People’s Party co-chairman Asif Ali Zardari’s assertion that the new government wants to improve economic relations and will not allow the Kashmir issue to come in the way of greater economic contacts.
Meanwhile, Pakistan has diverted global trade worth more than $4.1 billion (Rs17,507 crore) towards India following the inclusion of 438 new importable items in the positive list over the past 10 months.
This expansion has led to the widening of Pakistan’s trade deficit with India to $893 million in 2006-07 from $737.36 million in 1999-2000. With the latest expansion in the list, the deficit could touch $1.5 billion.
Official figures for the July-March period of 2007-08 showed Pakistan’s trade deficit with India stood at $1.095 billion. Pakistan exported commodities worth $200 million to India in the July-March period of 2007-08, while the value of imported goods during the period touched $1,295 million.
Pakistan’s exports to India have stagnated between $200 million and $400 million.
While unveiling the new trade policy last week, commerce minister Chaudhry Ahmed Mukhtar said Pakistan was “gradually liberalizing” trade with India.
He said the government had approved the import of 136 new items from Pakistan, including fuel oil and diesel and CNG buses.
However, not everyone is in favour of the expansion of trade with India. The Pakistan Association of Automotive Parts and Accessories Manufacturers has flayed the decision to allow the import of CNG buses. Association chairman M.A. Malik urged the government to revoke the decision.