Pakistan and India, the two largest and most populous nations in the South Asian region possess a massive potential of promoting intra-regional trade. Currently, three channels are in vogue for the bilateral trade. The formal channel is the one which has been declared as the legal channel by both the countries. The next one is the illegal trade which is being carried out swiftly due to the loopholes in the bordering areas. There is a third trade route which involves third-party countries including Afghanistan, Singapore, and Dubai where several agents from these countries are harbouring illegal trade routes. In an article published in the Business Today, statistical data has shown that either country can easily generate the trade revenue summing up to $30 Billion if the two sides end the tug-of-war on several fronts.

Despite the presence of a significant trade and commerce potential, neither of the countries is trying to separate political contradictions from the business. Repeated international charter violations on the LoC, savagery in occupied Kashmir, India’s stance on Kulbhushan Jadav and several other striking issues keep both countries pushing each other over the ledge. When it comes to trade, both the states have adopted an open trade policy with the rest of the markets in the world, but when it comes to taking steps to promote and enhance the bilateral trade, steps are taken, but eventually, every plan faces a hostile situation on both ends.

However, the business ties of Indo-Pak have a long history of ups and downs since the 70’s. According to the State Bank fiscal year reports, the volume of official trade in 2003 was $309.8 million which increased to a mere $2 billion in 2016. The irony is, the business via the illegal channels amounts to $2 billion as well which is indeed alarming. Due to the lack of effective policymaking in Pakistan, the bilateral trade has in most cases, favoured India.

Aside from India, Pakistan’s trade deficit seems to be increasing with other countries as well. The truth may sometimes be unpleasant to digest but factors like sub-standard quality of the export items, low productivity of usable goods and heavy duty imposed by our government, are deteriorating our overall trade image across the globe. This environment, on the one hand, has dramatically affected the import/export ration while on the other hand, has caused a dimension shift over to India because their industry is booming at the expense of the loss of Pakistani market.

It is indeed, a gloomy situation for Pakistani industrialists; however, the million-dollar question remains! What is the way forward? Will Pakistan and India keep severing the trade relations like they have been doing in the past or is there any ray of hope which can illuminate and eventually brightens the horizons for both sides? Looking at the statistics still indicates that if Pakistan pursues trade liberalisations with India, it will continue to weaken our position because India doesn’t import a lot of products which Pakistan exports. For instance, our economy relies on cotton, sugar, and rice which India is self-sufficient in. On the other hand, we import items like tea, petro-products, hydrocarbons, engineering equipment, motor vehicles and so much more which of course, India can easily provide for.

Reports from FY-201 shows that Pakistan spent over $6.5 billion on the import of these items and India at the moment is exporting $21 billion on exporting of the same things. It gives an Indian industrialist to easily chip into the Pakistani market and make its way right through via the official or the illegal channel. A way forward for Pakistan, in this case, is to allow the Indian market to trade with the local industrialist and save the extra cost which is incurred on our economy on importing these goods from countries like China and far West. This will not only be a viable solution but will also provide a strong foundation to our economy by lowering the added cost which an average Pakistani pays for absolutely no reason.

Once a state of mutual understanding and trust is maintained, Pakistan can expand the exports by reaching out to the Indian market for the goods like wheat, silk, leather, surgical instruments, jewellery items, dry fruits and so much more.

A paper published in 2016 claimed that Pakistan backed off from giving the MFN/NDMA status to India twice which further strangled the business ties between both the countries. The reasons which the same paper didn’t mention was India’s brutality in occupied Kashmir because whenever Pakistan has extended the hand of friendship, India misjudges the kind gesture and in return, activates the terrorist elements which play a fatal role for business on both sides.

The restrictive trade regime of India puts several tariff badges on Pakistan while adopting free trade policies with countries like Sri Lanka and Bangladesh. India should comprehend the fact that times are changing rapidly and now is the time to work constructively towards a better future rather than bawling on issues which are to be solved diplomatically. The trade restrictiveness index of India, as recorded by the World Bank is quite higher than that of Pakistan, and this is to be considered as a clear answer to the economists of India who try to justify their country’s morbid policies.

Strong bilateral trade ties are in favour of both the countries and Pakistan is always looking forward to it. India reciprocating the gesture will boost the process further. Our law enforcement agencies have minimised the element of terrorism, and there can’t be a more suitable time for investments than today. If there establishes a trade channel void of any politicisation, the entire world will witness South Asia rise on the business horizon.


The writer reports for Fox News in

Pakistan and contributes opinion

columns for Pakistani Newspapers and

National Herald India newspaper.