As a result, the unofficial trade between the neighbours is likely to grow further
BANGALORE: Coming as it did on the penultimate day of the 28th India International Trade Fair (IITF), Mumbai's date with terror on 26/11 came as a shock not just to India but also to 70 or so Pakistani exhibitors who were registered to participate in the 13-day trade show.
Slated to travel further to Amritsar for another trade expo organised by the local chapter of the North Indian trade body PHDCCI, only 22 of them could muster the courage to go ahead with the plan while the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and other participants dropped out.
That just about sums up the future of Indo-Pak trade, which has come to a grinding half after the Mumbai terror attacks with the Indian government clamping down unofficially on business ties with the neighbour. Only the brave will attempt to trade with each other in the current circumstances.
The two countries do not have a formal trade agreement, but in 1996 India granted most favoured nation (MFN) status to Pakistan. Islamabad on its part maintains a positive list of 1,075 items that can be imported into the country from across its eastern border. Agricultural and dairy produce, sugar, rice, machinery, engineering goods, and tyres make up most of the trade basket between the two countries.
Not surprisingly, the balance of trade is heavily skewed towards India. In the first quarter of the current fiscal, India's exports to Pakistan grew almost 13% when compared to the same period last year, reaching Rs1,891 crore. Pakistan on the other hand exported goods worth just Rs237 crore, a drop of 16.29% over the same period last year.
“Official trade with Pakistan including 100% of film exports by India will come to a total halt,” said RK Dhawan, chairman, northern region, at the Federation of Indian Exporting Organisations (FIEO). “Business ties are a secondary issue and politics is at the forefront. It will have a very bad effect on trade.” Trade through the Wagah checkpoint is down to a trickle. Negotiations between the countries to open up additional trade points have been painfully slow.
Within the Saarc block, India has been Pakistan’s biggest trading partner in the past six years, accounting for almost 50 per cent of the trade within the region. Following the relaxation of cement imports earlier this year, Pakistani companies were planning to export six million tonnes of the commodity to India annually, making this its largest market for cement.
While the official trade may have come to a halt, the thriving unofficial or third-country trade between India and Pakistan, which is currently at least five times as large as the official trade, goes on. While officially the two countries traded goods worth nearly $2 billion, the third-country trade between the two is estimated at close to $10 billion,
according to Krishan Kalra, secretary-general of the PHDCCI, the main industry-level interface with Pakistani trade bodies.
“This will continue as exporters cannot afford to stop their business, particularly in the current circumstances,” Kalra said quite frankly.
