Despite being in enmity and having fought several wars, business between India and Pakistan has neither really stopped no flourished. Increasing tensions on LOC recently have once again raised the question that trade with India is feasible or not? If yes, then few questions immediately popped up in anyones mind could be that are we compromising on the countrys sovereignty? Are we not sound enough economically to look up for alternatives? The issue also arises what other ways could be adopted to minimize this state of apprehension between the two neighboring countries. The answer might not be as simple as the question seems to be, however the debate is ongoing.
The role of quantitative restrictions (QRs) and non tariff barriers (NTB) has some interesting analytical revelations for us in Pak-India trade. Since India has granted Pakistan Most favored nation (MFN) in trade from 1996 not only India is facing strong opposition for this decision but also pressure is mounting up on Pakistan to do the same for India. Although jumping to a conclusion might not be a very wise idea because as per the opponents of granting MFN to India our market is not as big as Indias and flood of Indian goods in Pakistan are dramatically going to destroy the local market. On the other hand those who support the ongoing talks of MFN argue that South Asia Free Trade Agreement (SAFTA) is something even bigger then MFN and having SAFTA there while not accepting India as MFN doesnt make any sense. In spite of granting Pakistan MFN India has not removed many of NTBs which evidently has made Pakistan more reluctant in trade with India. Sustainable development policy institute (SDPI) last year identified that inflow of only illegal Indian goods in Pakistan worth $4.2 billion annually which turns out to be major setback for Pakistans economy as it deprives us from import duties that those goods might have paid while coming legally. Same was accused as the reason why India is not serious in removing NTBs. Several pacts have been made by both countries to remove these barriers. In the year 2012 Indian joint secretary for commerce Arvind Mehta and then president of LCCI Mr. Irfan Qaiser Sheikh showed commitment to get rid of many of NTBs and made three agreements to do so.
Trade between two countries adopts three routes: rail route, road route and sea route. Out of these three, road route is the cheapest one but least adopted due to lack of infrastructural facilities on either ends and also because of regulatory issues. But looking in a greater perspective all these facilities issues can be resolved within no time once relations between both countries are stable on borders.
To understand the dynamics of Pak-India trade we need to have a closer look on the border that we share with India. International border, LOC and working boundary are what separates Pakistan from India. The impact of tensions on LOC had always hindered trade between two countries. Both countries have accused each other of starting unprovoked firing and killing innocent noncombatant citizens residing near border. Recently in October 2014 cross firing at border by both countries have ignite more fire and hindrances for trade. Reportedly 1,000 mortar shells were found in Pakistan side being fired by India in just one day. The BJP government however took aggressive stance on the same issue which led to discontinued talks between two countries for a while. Both prime ministers however shook hand on 18th SAARC conference held in Katmandu, Nepal. Similar discontinuation was faced but with a greater intensity in the in the year 2008 due to Mumbai attacks allegedly carried out by a terrorist group in Pakistan which was resumed later as foreign ministers of both countries had a meeting. Piling up the issues the water dispute remains unavoidable to mention. Water for Pakistan has always been a critical issue also because of energy crisis. Weather it is Wular lake Biglihar dam or the issue of Kishenganga recently emerged, disputes and conflicts are growing.
The mystery remained unsolved that where this trade is going to lead. Analysts have different views on both sides some favoring and some opposing trade between two countries. Beneficiary to the formal and legal trade between Pakistan India would be both but still the restrictions that are holding two countries back from taking initiative appears to be more valuable for both. Trade however cannot reach a smooth and continuous level until and unless both Pakistan and India realize that prosperity of the region is heavily depending on two nations. Looking forward to stabilize ones own economy together Pakistan and India need to identify the areas of mischief for trade including that of tensions on LOC and have more agreements to avoid them. Previous ceasefires ended up as joke when they were needed to be exercised the most. Top authorities have to ensure their side is not involved in initiating the trouble.
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