India and Pakistan to enhance economic and commercial ties
New Delhi: India and Pakistan have agreed to enhance economic and commercial cooperation, saying that it would contribute to the well being of the people of the two countries.

A joint statement issued at the end of the three-day visit of the Pakistan President, General Pervez Musharraf, said that both the leaders have agreed in their talks that they should increase road and rail links, revive a panel to promote trade and put in place more confidence-building measures.

The Prime Minister, Dr Manmohan Singh, with Gen. Musharraf by his side at the Hyderabad House here, read out the joint statement at a brief function.

While agreeing that the two economies of South Asia should work together for the greater prosperity of the region, the joint statement said the leaders have also decided to reactivate the Joint Economic Commission "as early as possible." They also agreed that the Joint Business Council should meet soon.

The leaders resolved to increase the frequency of the Srinagar-Muzaffarabad bus service that was inaugurated in April 7, and also decided that trucks would be allowed to use this route to promote trade. They have also agreed to operationalise additional routes, including that between Poonch and Rawalakot, and look forward to an early start of the bus service between Amritsar and Lahore and to religious places such as Nankana Sahib.

They also said that the Consulates General of the two countries in Mumbai and Karachi, respectively, would be opened before the end of the current year, to enable visa formalities for people and businesses to be made without much hassles.

In another important development, it was agreed that the Ministers of Petroleum and Natural Gas would meet in May to explore cooperation in the sector, including on the issue of the pipeline gas project between India and Iran through Pakistan.

Both the leaders proclaimed, "The peace process was now irreversible," kindling hope that economic and commercial cooperation would see a renewed momentum.

The joint statement said that conscious of the historic opportunity created by the improved environment in relations and the overwhelming desire of the people of the two countries for durable peace and recognising their responsibility to continue to move forward, the two leaders had "substantive talks" on all issues.

The Pakistan President, while wrapping up his visit highlights at a breakfast meeting with select media persons here, said, "Our achievements on all issues are more than what I expected."

On Kashmir, he said, "It will need a lot of time and wisdom to arrive at a settlement. Let us go step by step."
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S&P hails thaw in Indo-Pak ties
New Delhi: Global ratings agency Standard & Poor's has said that the recent "dramatic" improvement in Indo-Pak relations promised distinct benefits for the two countries if the thaw can last.

"The likely rewards for Pakistan can be largely defined in concrete economic terms, the combined effect of which would boost the country's positive credit rating trajectory. For India, however, the benefits are of a less tangible nature, and would accrue more to New Delhi's international standing," S&P has said in its latest report.

S&P rates Pakistan's foreign currency at "B+" with "Stable" outlook and local currency at "BB" with "Stable" outlook while India enjoys a higher rating of "BB+" with "Stable" outlook.

For India, S&P said "the benefits are clearly more on the political side, rather than economic."

Although there would be tangible gains from increased trade with Pakistan and easier access to Iranian gas, these would be less significant to India because of the comparative size of India's economy over Pakistan, it said. India's greatest mileage from a deep rapprochement with Pakistan would accrue from its improved standing on the world stage and with the US.

This in turn could prove instrumental in better trade and defense ties with the superpower, and would also advance India's claim to a permanent seat in the Security Council. Terming the thaw in relations as "impressive", S&P said despite occasional setbacks, the two countries have come a long way since the Lahore Declaration in 1999.

Listing out the three major benefits to Pakistan, S&P said improvement in ties would reduce its military expenditure, which could be channelised in social sector. This would help Pakistan attain better fiscal balance and reduce debt burden.

Pakistan's defence expenditure has averaged 25 percent of total expenditure, or 4.5 percent of GDP, over the past eight years. This has dwarfed its development funding, which averaged 13.6 percent of expenditure.

This is a level of defence spending that Pakistan can ill afford, S&P said.
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VAT panel mulling intermediate rate slabs as prices rise
New Delhi: After the introduction of VAT, prices of twenty-six commodities across the country have risen as these commodities are taxed under VAT at a much higher rate than they were in the old sales tax system.

The Empowered Committee on VAT is now seriously thinking of an intermediate rate of eight per cent so that there is no drastic increase in prices. "We are willing to be flexible on the issue of variation in tax rates. We have to give states adequate flexibility but within the federal set up," said Asim Dasgupta, Chairman, Empowered Committee, VAT.

Dasgupta has hinted that the committee may consider introducing more tax slabs especially as states like Uttar Pradesh say they might consider joining the VAT regime if the tax slabs are more graded.

"It is important that you have an intermediate rate of eight per cent otherwise by having just the four and the 12.5 per cent slabs, either prices shoot up if the commodity is taxed a 12.5 per cent or otherwise government loses revenue if its taxed at a lower rate of four per cent," said Ashok Vajpayee, Minister for Agriculture, UP.
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Hamburg sets up representative office in India
New Delhi: Hamburg, the richest industrial city in Germany, has set up its representative office in India to boost trade ties between India and Hamburg.

Hamburg's India office will look for new business opportunities between India and Hamburg, especially in the fields of civil aviation, airport and port development, pharmaceuticals and biotechnology.

Hamburg has one of the most modern and busiest ports in the world and is considered the gateway for Germany and other parts of Europe. It is famous for Airbus Industrie's manufacturing unit, Lufthansa Technic base, Mont Blanc pens, Philips Medical Systems, Olympus, and the Beiersdorf company, the makers of the Nivea brand.
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