Is the largest market in the making?

Just seven months prior to the summit meeting of the South Asian Association for Regional Cooperation (SAARC) member states, a Pakistan National Assembly member, Saleem Jan Mazari, asserted at a conference at the Indian Merchants Chamber (an apex body for trade, commerce and industry in the western region of India) that, "if the three countries, namely India, Pakistan and Bangladesh, came together they would be the biggest consumer market in the world". In the light of the January 2004 SAARC summit in Islamabad, the thaw in the relations between neighbours and arch rivals India and Pakistan is expected to give a tremendous boost to bilateral trade activities. The resulting environment is projected to be cut-throat in terms of the competition between the producers of the two countries in the long run, while trade balance is expected to be in India's favour in the short to medium term.

Based on the idea of a unified 'South Asian market', a businessman of Indian origin based in Singapore, AR Jumabhoy, prepared a document a month before the SAARC summit in which he claimed that India, Pakistan and Bangladesh, with a total population of close to 1.5 billion people and with a fairly impressive combined GDP, can offer larger sized markets for trade and industry. The SAARC meet also endorsed the observations and finalised the South Asian Free Trade Agreement (SAFTA). This treaty binds all seven nations to reduce their tariffs in phases. Many analysts and business people feel that the two main economies which can make the treaty successful are India and Pakistan. "The two countries enjoy a fairly large amount of informal trade, and also face smuggling", says Rais Ashraf Tar Mohmmad, a Pakistani commodity trader. He cites the example of a very popular tobacco based product, Pan Parag, which he says can be found at almost any pan shop in Pakistan even though it is among the banned items in the country.