November issue 2002

Despite border tension and the suspension of trade through rail and road between Pakistan and India since December last year, bilateral trade between the two arch-foes remains almost unchanged. Pakistan and India have exchanged a hefty 90 million dollars worth of goods during the first half of 2002.

Pakistan reciprocated swiftly to the Vajpayee government’s disbanding of the bus and Samjhota Express services between the two countries, and Indian accusations of Pakistani involvement in the attacks on the Indian Parliament in December 2001, by suspending trade through rail and road links. There was, therefore, a general impression that trade between both countries had ceased to exist. However, recent statistics reveal that the suspension has not resulted in any significant dampening of the pace of trade between the two neighbours. In order to overcome the restrictions on land routes, both countries have started to trade via sea, with some consignments landing in Karachi and others coming in via Dubai.

In 2001-02, bilateral trade stood at 235 million dollars — with exports from Pakistan standing at 49 million dollars and imports from India at 186 million dollars. This reflects a minor slippage of 55 million dollars over the previous year with Pakistan-India trade in 2001-02 at 290 million dollars (exports: 55 million dollars; imports 235 million dollars). Indian businessmen have been affected more severely than their counterparts in Pakistan as the value of Indian goods imported into Pakistan reflects a 49 million dollar decline in 2001-2 over 2000-1. Pakistan’s exports to India, however, braved a feeble jolt of 6.22 million dollars, settling at 49 million compared to 55 million dollars in the last fiscal year.

The last fiscal also saw Pakistan’s trade with Dubai spiralling upwards suggesting that this could be a result of Indian and Pakistani businessmen routing trade through the Emirates. Trade between Pakistan and India via Dubai has the advantage of consignments not being scrutinised as much as those coming directly from either country. The diversion of trade through Dubai is evident from the unprecedented increase of 134 million dollars in Pakistan’s bilateral trade with Dubai in 2001-2. Exports to Dubai increased by 104 million dollars, while imports expanded by 30 million dollars.

Bilateral trade through land routes between Pakistan and India through the Wagah border is, however, a much more economical enterprise, with freight charges at almost half the cost of sea-fares. Additionally, the consignments are exchanged within a few days. Whereas trade by sea costs a minimum of 50 dollars per ton, trade through rail and road from Wagah comes 20 dollars cheaper at 30 dollars to a ton. Pakistan and India usually trade about 4000 items each year. In spite of India according the Most Favoured Nation status to Pakistan, this move has not been reciprocated, with Pakistan choosing instead to lay emphasis on continuing its Kashmir policy.