Tasting time

New Delhi, May 8: Pakistan’s decision on whether to throw open the Wagah border to Indian tea will be a key indicator of our neighbour’s eagerness to join the South Asian Free Trade Agreement (Safta).

Senior commerce ministry officials say the picture will become clear on July 1 when Safta comes into effect.

If Pakistan throws opens its borders to Indian tea, it is the plantations in the Nilgiri hills that will benefit as Pakistanis mainly consume the CTC (curl-twist-and-crush) variety unlike India where orthodox is consumed in large quantities.

According to senior commerce ministry officials, the exportable surplus in CTC tea is available mainly in the south as the CTC produced in Assam is consumed within India.

Past experience has shown that Pakistan is not keen to import goods from India even if they get it at a cheaper price. It now remains to be seen whether this mindset changes once Safta takes effect.

While India is the largest producer of tea in the world, a large quantity of the produce is consumed within the country unlike Kenya, Sri Lanka and Vietnam, which export most of their output.

Pakistan, on the other hand, is the second largest importer of tea in the world with 140 million kg flowing in every year. If the country opens its borders to Indian tea it will get the product at a cheaper price due to lower transport costs.

At present, tea imported to Pakistan comes from the Dubai auction where it is supplied by Kenya and Sri Lanka. About 5 million kg of Indian variety also makes its way to Pakistan through the Dubai route.

The commerce ministry is also ready with a kitty of Rs 15 crore to improve infrastructure at the border trading points with neighbouring countries to cater to the increased trade under Safta.

Infrastructure at the trade points at Petrapole on the West Bengal-Bangladesh border, the Attari-Wagah border in Punjab and the Mizoram border will be spruced up to facilitate cross-border movement of goods.

During the recent Safta talks in Dhaka, Pakistan commerce minister Humayun Akhtar Khan had expressed his country's readiness to buy Indian sugar as the crop in Pakistan has not been very good this year. Similarly cement prices have also shot up there and the Pakistani government had announced that it would not be averse to importing the commodity from India if prices did not come down.

Earlier, potato and tomato prices in Pakistan had gone through the roof and though the government did not go for any significant import of the vegetables the threat had succeeded in bringing hoarded stocks out into the market.