Indo-Pak grey market trade higher than official trade: ASSOCHAM

New Delhi, May 9, IRNA Link

India-Pakistan-Trade

Even though trade barriers between India and Pakistan have fallen substantially with softening of bilateral relations, the grey market trade between the two countries is still higher by 38 percent as of hte end of fiscal 2005-06.

The official bilateral trade figure for the period is at about USD 700 million while the grey market trade between India and Pakistan extended to USD 965 million during the same period, said a release issued by the Associated Chambers of Commerce and Industry of India here.

The reasons for the increasing grey trade between India and Pakistan as had been projected in a study were the easier flow of goods and services due to the developed network of informal traders across borders and lower transaction costs as compared to the formal channels.

In the unofficial route, traders do not have to go through procedural delays and administrative bottlenecks that increase their transaction costs.

The goods supplied are at relatively lower prices. There are no taxes and duties and goods coming through these channels do not bear the additional burden of duties, taxes and tariffs that raise their prices.

The existence of high transaction costs has forced much of the trade, even in commodities which are legally tradeable, to flow through informal channels. These barriers, in effect, become a key factor in determining whether informal trade is likely to flow through formal legal channels.

Implementation of SAFTA has brought about significant changes in customs tariffs and other trade-related barriers in the two countries which have led to restoration of direct trade linkages between them and reduced to a significant extent transaction costs, said the release.

In 2003-04, however, the two-way trade between India and Pakistan was estimated at USD 340.50 million, of which India's exports to Pakistan were to the tune of USD 287.70 million as against India's imports from Pakistan which were estimated at USD 57.80 million.

In 2004-05, however, India's exports to Pakistan were estimated at USD 506.47 million as against its imports pegged at USD 95.53 million.

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This is great slap on the faces of people who don't want good releations between india and pakistan. people on both side are trading with each other freely.In the past two years it a doubled, people from both countres will benefit from open trade.

People before you start negative reply just think who benefits from bad relationship with two countres.

what i would like to find out what items are in this grey trade?

Sorry posted on the wrong section,

Please delete or move to Economy section.