India, Pakistan agree to improve trade relations

India and Pakistan yesterday made a significant breakthrough on improving trade relations agreeing to consider the possibility of a preferential trade deal, easing curbs on investment and banking and relaxing the rules for issuing business visas.

Though Pakistan did not agree to grant most favoured nation status to India, the same found mention in a joint statement following commerce secretary-level.  Islamabad recognised that the move would help bilateral trade in the statement.

In a sign of a thaw in the relationship between the two sides following the Mumbai attacks in 2008, an agreement was reached on setting up a joint working group on trade during the commerce secretary-level dialogue.

In accordance with the minutes of the two-day talks held in Islamabad, India's commerce secretary Rahul Khullar and his Pakistani counterpart Zafar Mahmoood addressed various issues including the ones in key areas like examining feasibility of cross-border trade in electricity and all types of petroleum products.

According to analysts, a preferential trade deal would allow the lowering of tariffs on a set of products, or even allow duty-free import.

The mention of relaxation of investment and banking restrictions is significant as India bars investment by companies from across the border. Similarly, India does not allow banks from Pakistan to operate in India. The move comes even as several companies with operations in Pakistan are being investigated for possible terror links.