India's proposal to export 325,000 tonnes of diesel to Pakistan may have to wait till the resolution of the issue of non-tariff barriers that Pakistan says is hampering its exports.

"During India's presentation of the advantages to Pakistan on import of diesel and petrochemicals from us, we were given to understand that it would be taken up after the resolution of the non-tariff trade issues," an oil ministry official told IANS.

"Pakistan commerce ministry officials said they would be meeting their counterparts in New Delhi and that diesel should be part of the composite dialogue. We would be sending our proposal to the commerce ministry soon," the official said.

A major area of concern for Pakistan is the Indian tariff structure, which is adversely impacting its cotton textiles exports to India in particular.

Pakistani officials have stressed that despite the most favoured nation (MFN) status accorded by India, their exports to India is just a fraction of the bilateral trade of over $600 million through direct route.

"The Pakistan commerce ministry has already submitted to the commerce ministry here a list of areas where it is seeking a resolution," official sources said.

Under the special duty structure applicable to textiles, both Pakistan and Bangladesh have complained that the cheaper their product, the steeper the levies, making their products uncompetitive in the Indian market.

"These are some of the issues that would be taken up when the India-Pakistan Joint Study Group (JSG) meets here some time in Aug," a senior official said.

Parallel to the secretary level JSG meeting, the Federation of Indian Chambers of Commerce and Industry and the Federation of Pakistani Chambers of Commerce and Industry (FPCCI) would be holding business-to-business parleys.

Both the industry lobbies have recently set up the India-Pakistan Chambers of Commerce and Industry (IPCCI) with an eight-member study group that would finalise a "list of joint inputs to be submitted to the JSG", a FICCI official said.

The list of joint inputs is to be part of the preliminary study the two chambers are conducting about areas of possible collaboration and areas where they feel domestic industry needs protection.

"The final joint comprehensive report is expected to be ready by the yearend. Both the sides are keen that the list of approved products for imports should be expanded to encourage trade and the products not approved for trade should be restricted to only those products where domestic industry could be adversely impacted," the FICCI official said.

FPCCI president Chaudhary Muhammad Saeed told IANS, "We are keen that once our report is complete, both the governments should take it into consideration for a review of the negative list."

Pakistan has so far approved 768 items for import from India. This list does not include diesel or any other petroleum or petrochemical product.

Saeed admitted that along with the proposed collaboration on the Iran-India-Pakistan gas pipeline project, diesel could be considered as Pakistan is currently importing about 4.5 million tonnes of the auto fuel from Kuwait.

"Both countries being energy short, it would be good to join hands particularly in the case of gas supplies as it could help to bring down the costs. Inter-dependency will force us to move closer," said Saeed.