India-Pakistan peace boosts trade

Calmer relations between India and Pakistan are paying economic dividends, with new figures showing bilateral trade up threefold in the summer.

The value of trade in April-July rose to $186.3m (£97m) from $64.4m in the same period in 2003, the Indian Government said. Nonethless, the figures represent less than 1% of India's overall exports. But business is expected to be boosted further from 2006 when the South Asian Free Trade Area Agreement starts. Both countries eased travel and other restrictions as part of the peace process aimed at ending nearly six decades of hostilities.

Sugar, plastics, pharmaceutical products and tea are among the major exports from India to its neighbour, while firms in Pakistani have been selling fabrics, fruit and spices. "If the positive trend continues, two-way trade could well cross half a billion dollars this fiscal year," India's federal commerce Minister Kamal Nath said. According to official data, the value of India's overall exports in the current fiscal year is expected to reach more than $60bn, while in Pakistan's case it is set to hit more than $12bn. Meanwhile, the Indian Government said the prospects for the country's booming economy remained "very bright" despite a "temporary aberration" this year. Its mid-year economic review forecasts growth of 6-6.5% in 2004, compared with 8.2% in 2003. Higher oil prices, the level of tax collections, and an unfavourable monsoon season affecting the farm sector had hurt the economy in April-September, it said.