Enhancing bilateral trade with India

It is heartening to read that an entourage of 80 Businessmen visited India to boost our formal trade. Indians played good hosts to the Pakistani caravan by entertaining with sumptuous cuisine and trips to historical site, as well as the visit to the great Taj Mahal at Agra. It appears from the news flashes that some tangible result will come out and there is light at end of the tunnel.
I do see an encouraging statement from the commerce ministry and sincerely hope that we will bear in mind ground realities as India is on a growth trajectory, whilst we are going full speed astern with a minimal GDP growth of two per cent per annum. This is disastrous and due to our population increase off-setting the growth, we are stuck in a massive cycle of unemployment as our youth cannot find employment. Our entrepreneurs are disheartened due to power and gas problems due to which they are relocating themselves in Bangladesh, Sri Lanka and other peaceful heavens.
It is time that we learn from the experience of India and boost our formal trade, instead of trading informally through third countries on switch bills. After independence in 1947 as per authentic records, India was the larger and more significant trading partner of Pakistan, with exports to India at 56 per cent of total exports, mostly Jute and its products from eastern wing, and our imports were only 32 per cent of our total imports. The sad episode of 1965 halted trade, which remained insignificant for nine years. From 1975/76 the volume of trade creped forward and got an impetus in 1987. During 2001 to 2007/08 bilateral trade witnessed an eight-fold increase from 236.2 million to 1.95 billion, whilst again trade declined in 2009/2010 to 1.20 billion, however after signing of SAFTA agreement, exports to India have increased substantially to $313 million in 2008/09, but declined again in 2009/10 to $272 million. Imports from India increased at faster pace from $802 million in 2005/06 to $1.45 Billion in 2009/10. There is informal trade said to be about 3 quarters of a billions involving goods such as chemical, industrial machinery, tyres and viscose fabrics etc. The volume of informal trade is reflective of the trade potential between the two countries.
Businessmen are of the opinion that Visa regime is the biggest hurdle which happens to be true, as after partition there was no visa regime for travel between India and Pakistan that boosted bilateral trade, but on July 1948 India unilaterally announced imposition of permit regime confined to western borders. In retaliation of Indian move Pakistani cabinet decided on September 4th 1948 to impose permit system on both wings. The proponent of permit regime as per records is Vallibhai Patel who feared that migrated Muslims may return back to India. 1952 saw the India/Pakistan passport, replaced in 1965 by International passports. Let us forget the past and both governments must take an overview of these curbs on visa, in the light of 2011. The only way forward to boost trade is a liberal visa regime, so that people may move more freely to different cities and trade, otherwise the exercise is in futile.
The second important factor in boosting trade is to overcome the logistic infrastructural bottle necks. It is a recognised fact that Sea is the cheapest mode of transportation and ships carry about 90/95 per cent of world trade, thus Karachi/Bombay sea lane should be used to make our trade competitive. The Shipping Protocol signed in 2006 will facilitate trade. If we look in the past prior to 1965, British India navigation vessels “Dwarka” and “Dumra” had weekly, passenger and freight services, which were subsequently replaced by Scindia Steamship regular service of Passenger and cargo by “Saraswati” “Sabarmati”, these ships facilitated trade expansion and passenger services. Our Commerce Ministry must comprehend that Sea route is the cheapest mode of transportation followed by Railways which is dysfunctional in Pakistan, and land logistics is the most expensive mode, which must be the last option.
There is enormous potential in trade of agricultural commodities to bridge the short term gaps of crop failures. The two countries being 3rd and 4th largest cotton producers of the world, may collaborate by developing backward and forward linkages in textile. IT is has immense potential in India, thus our industry being in infancy may learn and develop by emulating the Indian example. We may import polymers at cheap rates from India too, so our Diesel imports from India may be cheaper as it is presently monopolised by Kuwait Petroleum. India exports 5 million tonnes of Diesel and our imports are 4.5 million tons, thus we may reduce our dependence on KPC to get better rates.

The writer is maritime advisor to Karachi Chamber of Commerce & Industry, and former Director General, Ministry of Ports and Shipping.