Indo-Pak Trade by D Suba Chandran

Improving the trade relations between India and Pakistan has always been discussed in the various summits between the leaders of both the countries at the highest levels. A cursory look at the bilateral trade statistics will reveal the dismal scenario between the two countries.

Indo-Pak Bilateral Trade since 1996 (in Rs Crores)

Year	Exports to Pakistan	Imports from Pakistan	Balance of Trade	Total Trade
1995-96	257.00	150.09	+106.10	407.90
1996-97	557.83	129.55	-428.28	687.38
1997-98	537.83	139.68	+395.47	676.82
1998-99	465.99	891.85	-425.99	1357.84
1999-2000	405.35	296.74	+108.61	702.09

Source: www.meadev.nic.in/agrasummit/in-paktrade.htm

The bilateral trade was less than one percent of their global trade. For example, during 1999-2000, Indo-Pak bilateral trade amounted to 0.22 percentage of

India

’s global trade.

There are at least eight issues involved in Indo-Pak trade. First, for increasing the trade between

India

and

Pakistan

, it is essential that

Pakistan

grants MFN status to

India

has granted this to

Pakistan

long back. Granting MFN status to

India

will benefit both countries.

Second,

Pakistan

has erected trade barriers against Indian goods, as a result of which bilateral trade is very low. Today, there are only 600 items which Pakistani traders can import from

India

Third, due to these factors, un-official trade (which should be differentiated from illegal trade) is four to five times greater than official trade. For example, in 1999-2000, the official trade between the two countries was worth $800 million, whereas, the unofficial trade was $1.2 billion. Goods such as medicines, videotapes, viscose fibre, cosmetics, alcoholic beverages, cotton fabric etc are exported from

India

to countries like

Singapore

and Dubai , from where they are imported by

Pakistan

. The local traders in

Pakistan

find Indian goods imported through these countries cheaper than similar goods being imported from Europe ,

USA

and

Japan

Fourth,

Pakistan

imports certain goods and commodities from far off countries at higher cost than from

India

. For example,

Pakistan

is the second largest consumer of tea in the world and

India

is one of the principal exporters of tea.

Pakistan

imports tea from

Kenya

, which is lower in quality and higher in price.

Pakistan

’s tea imports from

India

were always below 1.5 percentage of its total imports. Iron ore, essential for

Pakistan

’s engineering industry is imported from

Brazil

and

Australia

. Likewise textile machinery is imported from

Germany

. Besides paying a higher price,

Pakistan

also has to pay more for freight and insurance charges.

Fifth, there are certain commodities which, imported from

India

, would increase

Pakistan

’s exports to other countries and even make Pakistani goods competitive. For example, if

Pakistan

imports iron ore from

India

instead of from

Brazil

, the price of Pakistani steel would come down by at least 70 percent. Likewise, Indian chemicals and dyes will increase production in

Pakistan

’s chemical industry and make its products competitive in the global markets.

Sixth, there are certain commodities, which

Pakistan

does not allow to imported directly, hence the common man has to pay a huge price to import indirectly from

India

. For example, the Indian pharmaceutical products do reach

Pakistan

, but through third countries, thus increasing the cost unnecessarily. Indian tyres are smuggled into

Pakistan

. Since any way these Indian goods reach

Pakistan

anyway their direct import would reduce the cost and benefit the common man.

Seventh, infrastructure essential for bilateral trade needs to be improved.

India

and

Pakistan

should permit the movement of goods by road, rail and sea. Trade by road between the two countries through Wagah should be permitted. Besides, both countries could remove certain ridiculous procedures. For example, ships from Bombay cannot empty its goods at Karachi , unless it has touched a third country’s port.

Eighth, visa procedures for businessmen need to be made easier. Multiple entry visas and exemption from reporting to the local police are some of the measures that have been suggested.


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