The door’s open fo beer diplomacy and much more

[sanddy]

Tehelka - India's Independent Weekly News Magazine

THE BATTLE between Kingfisher and Murree Beer will soon become a reality
in the hinterlands of Punjab. Murree
Brewery, Pakistan’s oldest and finest
alcohol-maker, has been knocking on
Indian doors for a long time, albeit
unsuccessfully. Murree Brewery CEO Isphanyar Bhandara even
approached Indian liquor baron Vijay
Mallya’s United Breweries for help but
nothing materialised. With the Indian
government allowing Foreign Direct
Investment (FDI) from Pakistan, Bhandara’s dream will finally come
true.

Pakistan’s Economic Committee on
Trade has already allowed Murree
Brewery to export beer to India. “We
are hoping to export our beer to
Indian Punjab. Currently, we are
looking for Punjab-based importers,” says Bhandara.

It is not just Pakistani alcohol; we
might soon be withdrawing money
from Pakistani banks in India.
Pakistan’s richest man and Muslim
Commercial Bank (MCB) Chairman Mian
Muhammad Mansha has already applied for permission with the State
Bank of Pakistan and the Reserve
Bank of India to set up branches of his
bank in India. “Our rationale for doing
business is that India is a very
profitable market,” Mansha was quoted as saying in the Financial
Times.

Entrepreneurs from across the border
got a taste of things to come in April,
when India hosted the largest-ever
Pakistani fashion trade fair on its soil.
Lifestyle Pakistan attracted some of the
biggest fashion, jewellery and textile brands. At the end of the four-day
affair, almost all the counters displayed
a “sold out” sign at New Delhi’s Pragati
Maidan.

Manal Faheem Khan, who was one of
the exhibitors, recalls how excited the
Pakistanis were to see the response
from Indian consumers. “We do
export our garments sometimes but
we thought, ‘why can’t we directly open stores in India?’” she says. With
India allowing FDI from Pakistan, it will
be possible for Khan and other
retailers to open their boutiques in
New Delhi or Mumbai.

Business tycoon and former Karachi
Chamber of Commerce and Industry
president Majyd Aziz says it is
entrepreneurs like Manal Khan who
will be among the first to invest in the
Indian market. “Textiles is an area where Pakistan has done a lot of
innovation and might want to expand
in India,” he says.

Former Bombay Chamber of
Commerce and Industry president
Ashok Barat agrees. “Pakistan has
done some great work in textiles but
they will have to enter into joint
ventures with Indian partners due to our past differences,” he says. The
reason is due to decades of
misunderstanding “which will
disappear only when we work
together”, he adds.

Apart from textile, sectors such as
energy and cement might see a lot of
Pakistani interest, say businessmen
from both countries. But neither
Indians nor Pakistanis are expecting
huge investments from Pakistan at the outset. “In the first year, we might see
only a few million dollars in FDI,” says
Aziz.

Trade between India and Pakistan
amounts to $2.2 billion, out of which
Pakistan’s export share is $280
million.

But the idea of healthy Indo-Pakistan
business interaction doesn’t hinge
only on India allowing FDI from
Pakistan, says AH Imam, assistant
professor of Law & Policy at the Lahore
University of Management Sciences. Imam feels that the biggest turning
point in business relations will be
when the Reserve Bank of India
allows Indians to invest in Pakistan.
“Pakistan never had restrictions on
Indian investments but your central bank never allowed Indian money to
flow into Pakistan,” says Imam.

Aziz has a similar view. “I would not
call allowing Pakistani FDI into India a
landmark decision. It is a good
decision, but the landmark decision
will be when the Indian government
allows Indians to invest in Pakistan,” he says.