Indian industry Thursday expressed disappointment that serious economic and trade talks may not form part of the July 15 summit between leaders of India and Pakistan.

The industry representatives said the exclusion of the trade minister or business leaders from the delegation that will accompany Pakistani President Pervez Musharraf to the Agra summit clearly signals trade and business issues may not be on the agenda.

S. Sen, deputy director general of the Confederation of Indian Industry (CII), said though business leaders in India and Pakistan would continue to strive to strengthen trade relations at their level, trade talks between two head of states would have helped resolve some barriers.

"The fact that Mr. Musharraf would not be accompanied by the trade minister or any industrialists clearly shows that Pakistan wants to solve the problem of Kashmir before anything else," Sen said.

The poor trade relations between India and Pakistan took a further nose-dive after a bloody border conflict in Kashmir's Kargil region in the summer of 1999.
Pakistan has since banned the import of sugar from India even though it costs a third of what it pays for sugar from Brazil. New Delhi, in turn, refuses to buy cotton from Islamabad.

"We had expected some positive outcome on the trade front from the summit. It would be a setback for the trader communities in India and Pakistan if some important bilateral trade issues are not discussed," said Anjan Roy of the Federation of Indian Chambers of Commerce and Industry (FICCI).

FICCI, one of India's leading lobby groups, led a team of 35 industrialists to Islamabad in May -- the first such visit since 1995 -- to try boost trade, although relations between the two countries have been frosty for five decades.

"It would have helped both the countries if they chose to discuss and try to resolve some of the trade issues that have put up roadblocks in the way of boosting Indo-Pak trade," he told.

"Now we only hope that the summit ends on a positive note so that we can step up trader-to-trader contact between the two countries," Roy said.

Trade between India and Pakistan was a meager $149-million in 2000. Unofficial trade, smuggled or routed through third countries, on the other hand, totals a whopping $1 billion annually.

India's major exports items are oil mills, drugs and pharmaceuticals, plastics, and inorganic and organic chemicals. New Delhi imports fruits and nuts, sugar, rice, spices, cotton, textile yarn, fabrics, leather and other crude materials.

"It's really very unfortunate. We must understand if we develop trade and cultural relations, it will help resolve political problems also," said S.C. Mathur, executive director of Cold Rolled Steel Manufacturers Association of India.

"There is a lobby group within Pakistan who doesn't want normal trade relations with India because that will significantly reduce the volume of unofficial trade between the two countries," said Mathur, who was part of the FICCI delegation that visited Islamabad in May.

Jayant Bhuyan, secretary general of the Associated Chambers of Commerce and Industry of India, said: "Keeping the trade issues out of the summit means that the process of normalizing trade relations between India and Pakistan would get delayed.

"Nevertheless, I think good political relations will pave the way for closer trade links between the two countries."

Indian and Pakistani industry were expecting this weekend's landmark summit could deal with some thorny issues such as the proposed Iran-India gas pipeline through Pakistan that could help lay the foundation for economic cooperation between India and Pakistan.

The $3.5 billion pipeline project, first proposed by Iran in 1994, would go some way to meet the needs of energy-deficient India and bring cash-strapped Pakistan billions of dollars in transit fees over the years.

Indian industry had also hoped the government would push its Pakistani counterpart to grant most favored nation (MFN) status to New Delhi. Pakistan allows imports from among 601 select items and hasn't reciprocated MFN status to India.

"Pakistan should also recognize the need to increase economic cooperation between the two countries and grant MFN status to India," said Sushil Ansal, president of the PHD Chambers of Commerce.

"Trade and economic ties between the two countries will continue to be held hostage to politics. The loss is largely Pakistan's because its economy is already on the brink," said Pradeep Srivastava, a senior economist with New Delhi-based National Council for Applied Economic Research (NCAER).