Pakistan’s recent act of granting India Most Favored Nation (MFN) status would add insult to the injuries of Balochistan, as it would diminish the economy of the province worth approximately $15 billion.
The northern belt of the province that starts from Chaman and ends at the border of Taftan, Iran, is heavily dependent on Afghan Transit Trade, and this is going to get a severe blow from the granting of MFN to India. President Balochistan Economic Forum Sardar Shoukat Popalzai while talking to Profit said Balochistan is already bleeding and this status to India without consultation with stakeholders from the province would result in great damage to both the social and economic facets of the province. He further said that trade that would be done under this status is merely worth $2 billion, but the loss to the economy of the northern belt of the province will amount to $15 billion, yet the socioeconomic loss to the province would be unbearable and could create more unrest among the people of Balochistan. ‘It is ironic that the government on the one hand claims Indian involvement in fueling cross border insurgency in the province, and on the other gives the MFN status to the same country,’ he said, adding that this would only work to invigorate the negative sentiments among the people of the province about their lack of involvement in decision making. “We are aware of the fact that NATO and Pakistan are doing their best to engage the locals peacefully in the said area, but after granting of MFN status there are chances that narcotics and arms smuggling would increase manifold in the northern belt,” he added. ‘In other words India is trying to have a “dragon trap” on Balochistan by getting this status aiming to exploit all trade routes through Iran to Afghanistan,’ he said, adding that this is all being done for India’s future ambitions to fulfill its energy requirements through Central Asian Republics. Similarly, the international community had promised special development packages to Balochistan but nothing has been done so far in that regard, particularly with respect to Reconstruction Opportunity Zones (ROZ), a project that has been stalled for almost 10 years now, he added. ‘Given that Pakistan does not have strong anti-dumping legislations, India will use this opportunity to subsidise their business community to sell products cheaply in the indigenous market,’ he added. Earlier studies on the MFN issue suggest that Pak-India trade liberalisation is likely going to benefit both countries as it would help enhance trade to an estimated $5.2 billion (estimated bilateral increase of 79 per cent going forward from FY04 levels), with a potential to push Pakistan’s exports by another $2.5 billion.
It is to be noted that India holds a very small portion of direct and portfolio investment in Pakistan $0.5 million for Jul-Sep’11 (0.2 per cent of the total foreign investment), historically, languishing at a meagre $0.1 million (3-Year, average) of the total investment inflow. In recent years India has emerged as a major global sourcing, particularly in the sector of technology. As per State Bank of Pakistan report the mutual cooperation between the two countries holds potential benefit to sectors, including auto, minerals, agri, pharma, energy and telecommunication etc.
In terms of trade: On average Pakistan has remained a net importer of goods and services from India. In FY11 alone Pakistan’s total share of exports to India stood at 1.1 per cent ($0.3 billion) against the import share of 4.0 per cent ($1.44 billion).
In terms of commodities: Commodity wise composition of Pakistan’s exports to India remained concentrated in six sectors mainly. Out of this, textile, clothing and fresh food contributes 80 per cent of the total exports to India and Pakistan. Pakistan holds a comparative advantage over India in these commodities, in terms of product diversification and overall performance. Over the years both the share-wise and value-wise exports of goods to India have increased but at a lower pace (FY95: $41 million, 0.51 per cent of total exports, FY11: $286mn, 1.1 per cent of total exports).
