Trade between India and Pakistan, one of the most significant confidence building measures (CBM), has been moving smoothly despite the recent cross-border firing along the LOC which have escalated tension and overshadowed the resumption of the dialogue process for normalisation of relations. In fact, traders form both sides have been asking for upgradation of infrastructure to keep pace with expanding trade, especially through the Wagah- Attari land route. And with India mulling importing onion to increase domestic supply, traders in India are quite enthusiastic sensing another opportunity and have asked their counterparts in Pakistan to be ready with permission for exporting the commodity that their government does not allow.
Even cross-border trade along the Line of Control (LOC) in Jammu and Kashmir has not stopped, although running on a very low-key fashion. Pakistan government has sought assistance from the Asian Development Bank (ADB) to set up a border management system to deal with increased trade and transit traffic through the Attari-Wagah border. The objective is to speed up processing of goods and people and cut down on waiting time.
Bilateral trade is conducted mostly through the Mumbai-Karachi sea route and Attari-Wagah land route. The Indian government has said the ceasefire violations in the past few months and killing of soldiers have not affected two-way trade.
“Both sides have made considerable progress in improving bilateral trade ties. Pakistan has moved from a Positive List regime to a Negative List regime, which substantially increases the tradable items with India. India has similarly liberalized its earlier restrictions on inward/outward investment flows to Pakistan. Both sides also agreed on a detailed roadmap for Preferential Trading Arrangements under the SAFTA (South Asia Free Trade Area) process,” Minister of State in the commerce ministry D. Purandeswari told parliament.
Total trade between India and Pakistan for last year stood at $2,351.09 million compared to $1,942.76 million in 2011. Millions in revenue are currently lost via smuggling and informal trade. The World Bank says that there are significant gains for India and Pakistan out of MFN trade. However, the welfare gains increase dramatically with the improvement in bilateral trade facilitation. Pakistan’s exports to India would rise by a staggering 202 percent under the MFN plus enhancement of bilateral trade facilitation, says the Bank. Aftab Vohra, Lahore Chamber of Commerce and Industry convener on Indo-Pak trade, says that insufficient infrastructure and logistics is a kind of “non-tariff barrier” imposed by the two countries, which needs to be addressed for promoting two-way trade.
Trade flows between India and Pakistan despite LOC tensions
