India calls for trade with Pakistan in sign of thawing ties

Indian Foreign Minister Sushma Swaraj makes a speech in Islamabad on Dec 9, 2015.
Indian Foreign Minister Sushma Swaraj makes a speech in Islamabad on Dec 9, 2015.PHOTO: AFP

ISLAMABAD (Bloomberg) - India called for greater trade with arch- rival Pakistan as the neighbours seek to improve ties that have deteriorated since Prime Minister Narendra Modi took office last year.

The two nations with 1.5 billion people between them should set aside decades of mistrust to invigorate the region's economies and boost stability, External Affairs Minister Sushma Swaraj told a regional conference on Afghanistan being held in Islamabad.

She is the highest ranking Indian official to visit Pakistan since Modi took office.

"Let me take this opportunity to extend our hand to Pakistan," Swaraj said in a speech. "It is time that we display the maturity and self-confidence to do business with each other and strengthen regional trade and cooperation."

The remarks present a path to restart talks that have been repeatedly cancelled over the past two years due to increased fighting along their disputed border.

The rivalry between the nations that separated 68 years ago has been marked by three wars and persistent terrorist strikes, hampering the development of the world's least-integrated region.

"These are welcome remarks," Ayesha Raza Farooq, a lawmaker from Pakistani Prime Minister Nawaz Sharif's party and member of the Senate's committee on foreign affairs, said by phone. "It is a big market and because of our close geographical proximity, it does make sense to have better trade ties with India, just like with other regional countries."

Afghan Trucks

"India is prepared to move our cooperation at a pace which Pakistan is comfortable with," Swaraj said. "But today, let us at least resolve to help Afghanistan -- in the best traditions of good neighbourliness -- through more effective transit arrangements."

India is willing to join an Afghanistan-Pakistan transit agreement and create facilities at the border town of Attari to receive Afghan trucks coming through Pakistan, Swaraj said.

India is also backing a port project at Chabahar in Iran that would allow landlocked Afghanistan to export minerals bypassing Pakistan.

Pakistan won't allow trucks from Afghanistan to reach Attari in India, making them stop about a kilometer short at the last Pakistani checkpoint of Wagah.

In an interview with The Hindu newspaper in May, Afghan President Ashraf Ghani threatened similar restrictions for Pakistani trucks seeking access to central Asia through Afghanistan.

While India and Pakistan share a 3,200km border and have mutually understandable languages, trade between economies accounting for 20 per cent of the world's population was a paltry US$2.9 billion (S$4.08 billion) last year. Easing travel restrictions and lowering tariffs would boost that five-fold to US$12 billion, according to the World Bank.

When India and Pakistan split in 1947, they both accounted for more than 60 per cent of each other's trade.