Dr. S.S. Chhina : Common history, culture, language and background etc alongwith the Geographically Proximity for road and rail link between India and Pakistan provides the lot of opportunities to carry out their trade within minimum time and cost as compared to any other country of the world. But it has not happened, Jeopardising the economic interests of both the countries. Just after the Independence in 1948-49, the share of India’s Exports to Pakistan in the global export was 50.60% whereas the share of Imports was 23.60%. Then started the trend of perpetual decline in trade and in 1975-76 the share of exports decelerated to 0.06% and that of Imports to 1.3%, when SAARC (South Asian Association of Regional Cooperation) was formed in 1985, to promote the cooperation and particularly the trade among the Regional Countries but that had evoked luke-warm response between these two countries. It negates inevitable spin off in the trade that slowly stagnated at one point. It became clear that the continued under current of conflict resulted in the fall of trade between these two countries.
SAFTA (South Asian Free Trade Agreement) was signed in 2006, that stipulates the M.F.N (Most Favoured Nation) to member countries. India had granted that status to Pakistan, but Pakistan has not granted this as yet, ostensibly India had not withdrawn this status for Pakistan also. The M.F.N. status stipulates to look for the interests of the other country at priority.
In 1995 when W.T.O. was formed, it was feared that as the Global market would be thrown open and competitiveness in Trade would further escalate and that would be harmful for the predominantly agricultural countries but heading towards Industrialization like India & Pakistan. The new vicissitudes ushered with W.T.O., remained beneficial for India as it provided number of opportunities for export of roducts. The Indian share in the Global trade was 0.64% in 1996 that had escalated to 2.06% in 2013 or it increased by more than three times. But on the other side Pakistan could not gain by global opportunities. Its share in the global trade was 0.19% in 2013. The share of Pakistan exports in Global Exports was 0.17% in 1996 and its share in Imports was 0.27% but in 2013 its exports dwindled to 0.13% and share in Imports decelerated to 0.23%. On the other side the share of Exports of India that was 0.61% had escalated to 1.66 and Imports that was 0.68% increased to 2.46% in the same period.
Albeit Pakistan has only 0.19% share in the Global Trade, but its Trade with India is perpetually declining. In 2013 Indian Exports to Pakistan were only 0.04% of its total exports whereas its share in Imports was only 0.02%. Because of the liberal trade policy, India is striving to export maximum whereas the Pakistan a bent upon to Import the minimum from India. Recently when Afghanistan warned Pakistan that if it restricts the passage of its traded goods from India, then Afghanistan would be constrained to block the Pakistani goods for their Trade to Iran and other Central Asian Countries. In response to this warning, Pakistan declared that it would allow Afghanistan goods for their export to India but would not allow Indian goods for their destination in Afghanistan. Actually India had out pace. Pakistan in its Industrial development and Pakistan does not wish to compete India for its exports in Afghanistan.
Now when India is set to withdraw the M.F.N. Status from Pakistan it would further affect Pakistani Trade. Pakistan is importing large quantity of cotton to be used as raw material for its textile factories. The decrease in supply of cotton would affect the employment of those persons working in such factories. The other consumer goods like tea and chemicals etc. would become costly, if their supply would be procured from alternative sources because of the distance resulting into more time and cost of transportation. In 2015-16 India Exported goods worth 2.17 billion dollars to Pakistan and on the other side imported goods worth 0.44 billion dollars. In this way Indo-Pakistan bilateral Trade was worth 2.70 billon dollars. According to the Trade Experts it can easily rise upto 20 billion dollars because of the Geographically proximity. It is worth noting that the number of goods are being traded between these two countries through the routes of Singapore, Dubai etc. Those goods are purchased at higher prices only because of the incompatible policy of Trade between these countries.
India and Pakistan have certain special features in their external trade. India and Pakistan along with Bangladesh still holds most significant position in the export of textiles and readymade garments. India and Pakistan holds monopoly in the supply of Basmati. Basmati of these two countries is being exported to number of European, American and Middle East Countries.
The European Model should be emulated there are political tensions among these European countries also but those are not affecting there trade propositions. Similarly the potentials of trade prospective between two countries must be explored setting aside the political tensions. Both the countries are Agricultural but the share of Agriculture in their respective G.D.P. is declining every year. The population dependent on Agricultural is required to be shifted to Industry and Service Sectors where the trade between these countries can help each others Industry.
Inspite of the fact that insignificant trade is being carried out in these two countries, It would be pragmatic to adopt the astute policy to promote the trade that would be beneficial for promotion of economic development and prosperity. Keeping in view the track record in trade, the future conjectures are also not optimistic. There is need of serious introspection on the issue of Bilateral Trade where Economic interests must be given priority for the prosperity of both the countries.
The Writer is a Senior Fellow, Institute of Social Sciences, New Delhi