India to offer fresh trade sops to Pakistan to strengthen ties NEW DELHI: In a move to help promote trade and bilateral ties with Pakistan, the government is set to slash 30% items or 254 products from the sensitive list under the South Asian Free Trade Agreement (Safta) with the Cabinet set to consider the proposal on Friday. As part of pruning the list for non-least developed countries, which includes Sri Lanka, India plans to reduce peak customs duty on these products to 5% over three years. Eventually, the sensitive list for least developed countries like Bangladesh and Nepal is to be merged with the one for NLDCs and reduced to 25 alcohol and tobacco-based products. The decisions are intended to boost trade in south Asia, a development that will have positive spin-offs for India and the rest of the region while bringing about closer economic integration and a strengthening of ties among nations often divided by politics and history. Under Safta, there is a provision for a sensitive list where countries can impose restrictions to prevent misuse of freer trade. In India's case, "sin goods" are the essential feature of the list for LDCs. India will monitor progress on negative list The government's proposed move to slash 30% items from the sensitive list under Safta follows the decision taken by the government in February to reduce its sensitive list with Pakistan during a meeting of trade ministers. The demand for reciprocity on MFN has been pending since 1996. Promising to grant MFN by the end of the year, Pakistan has notified a negative list, where trade will not be permitted, instead of the earlier system of a small positive list of products that reduced trade to a trickle between the two neighbours. India has decided to unilaterally grant preferential access to an additional 30% items from Pakistan to help speed up improvement in trade ties following a breakthrough achieved in May 2011. As the Cabinet considers the proposal piloted by commerce and industry minister Anand Sharma, it will also try to ensure the concessions being offered don't turn into a one-way traffic without Pakistan meeting its commitments. To this end, at least three milestones are being fixed. India will monitor Pakistan's initiatives to eliminate the negative list of 1,209 items and only retain a sensitive list. This will mark a major shift in Islamabad's trade position with regard to India and result in full operationalization of Safta as Pakistan has promised to grant India MFN status. The second focus area will be Pakistan's movement on pruning the sensitive list so that there are few items on which restrictions are maintained. Also, the government wants progress from Pakistan on expanding the list of products that can be traded through the land route, especially the Attari-Wagah border. Indian officials have repeatedly said that in absence of any movement on this front, trade will not increase. If the list is expanded, products such as garments and hosiery or even sweets can move both ways from Pakistani Punjab to Indian Punjab. In the absence of further opening up, transportation cost by the sea route will hinder increase in trade which in 2010-11 was estimated at $2.4 billion according to data on the commerce department website. Trade through unofficial channels such as the UAE and Singapore are estimated to be worth several times more.