A discussion on further liberalizing Pak-India trade always draws a lot of passion and mixed reactions. However, regardless of which way we look at it - economically or politically - most analysts are unanimous that the right way forward for the two countries is to trade more with each other, albeit with elements of fair play and reciprocity. And it is in this context that one feels that the cancelling of foreign-secretary level talks by India is a step in the wrong direction by the Modi government. In fact, given the recent pragmatism and prudence shown by Mr. Modi in handling domestic issues, where he has retracted from quite a few election-time promises that clashed with India’s larger interests, it is disappointing that he could not put aside his personal Pakistan-bias to move forward with improving this crucial bilateral relationship.

Sadly the Pak-India relationship ever since ’47 has been that of two adversaries; an unhealthy rivalry often bordering on animosity, one which has held hostage the true economic potential of both countries and in the process has relegated the lives of millions of people into abject poverty. Reports say that the Prime Minister personally made the decision to pull out of the talks, going over the head of foreign minister Sushma Swaraj, and if true, it rings alarm bells for the future of the Pak-India relationship. It depicts a Modi going back to his old ways of ‘do-it-alone’ and personality driven policy-making.

Apparently the directions for vetoing the Bali Agreement in Geneva also came directly from the Indian Prime Minister and again if true this style of management does not augur well for the global community in general and for the future of South Asia/SAARC in particular. Before this backdrop, opening up Pak-India trade any further than where it presently stands tends to be trickier than ever before, to say the least. The present trade equation as it stands is heavily skewed in India’s favor and Pakistani business and industry has been crying foul about a host of Indian non-tariff and tariff barriers that refrain from allowing a level-playing field to Pakistani entrepreneurs. Today, India levies 30% duty on all cotton woven fabrics, cotton knitted fabrics and polyester/cotton woven fabrics, which is supplemented by landing charges, countervailing duty, cess rate and additional countervailing duty. Perhaps the highest effective duty rate not only in the South Asian region but also in all of Asia (China’s import duty rate for Pakistan is only 14% and South Korea’s is 23%). In motorcycles, India’s import duty rate is 100% as against 65% being charged by Pakistan and for cars (1000-1300 cc) it charges 125% against 60% charged by us.

There is a fine line between laudable perseverance and a stubborn refusal to admit that change is needed; a change in the way trade is conducted and more importantly in the way the ‘enhancement-in-trade’ between the two countries is ‘planned’ by their respective governments. As covered above, the Pak-India trade troubles tend to run quite deep. While one shares the core belief relating to the value of global trade liberalization per se, the way the commerce ministries of both Pakistan and India have been pursuing this goal by seeking grand openings covering composite trade, is neither working nor desire able. In theory it is all very well to promote overall deal-making: For example, India allows more cement to come in from Pakistan, and in return is able to sell more pharmaceuticals to Pakistan. In practice, rioting Pakistani farmers will just not care whether the cement mills in Pakistan have done a good job at exports to India or not. Attempts so far to liberalize trade in general have failed and perhaps it is time now to consider concentrating only on those specific areas that can provide a win-win for both sides. This means the all-encompassing endeavors at expanding Pak-India trade should be ditched to pursue a number of modest initiatives covering specific industries/sectors: seek a deal on cotton using custom facilitation and duty fairness, for instance, and not on lumping together the entire farming sector. An industry or sector should be selected and the agreement on liberalizing it should be conducted in months using the help of related professionals and entrepreneurs on both sides. This would cut the gamesmanship of the sort Mr. Modi has recently displayed. It would also be a drastic departure from the way the two sides have conducted trade negotiations thus far. In essence, this departure from ‘grandiose’ will signal a message: don’t let the bulk be the enemy of good. It is better to have some trade expansion on a sustainable basis than none at all.

 The writer is an entrepreneur and  economic analyst.

kamal.monnoo@gmail.com