India-Pakistan Trade Perception Survey

This Trade Perception Survey was undertaken to understand how stakeholders engaged in India-Pakistan trade perceived impediments faced by them in realising the trade potential between the two countries.

India-Pakistan Trade Perception Survey
Nisha Taneja, Sanjib Pohit, Mishita Mehra, Prithvijit Mukherjee, Isha Dayal, Samridhi Bimal
Published by Academic Foundation
Pages: 80; Price: Rs 995

The book under review is a survey conducted by the Indian Council for Research and International Economic Relations (ICRIER). Nawab Sharif’s, President of Pakistan, visit to attend the swearing-in ceremony of Narendra Modi as Prime Minister has kindled hopes of revival of friendship between the two nations. In this context any book on India-Pakistan relations is welcome.

Trade between India and Pakistan has for long time been inextricably intertwined with the political relations shared by the two states; less being decided by economic causes. Immediately after the Partition in 1947 trade between the two countries was negligible; while it picked up slowly, the war in 1965 resulted in a standstill. A protocol on resumption of trade was signed in 1974. In 1996 India accorded Most Favoured Nation (MFN) status to Pakistan. India stopped the trade via the air and land routes between 2001 and 2004 following the attack on our Parliament in 2001.

In 2013, for the first time since 2004 cross-border trade was altogether stopped consequent to firing across borders. It was resumed shortly. Restriction on trade was for several other reasons such as restrictive maritime protocol until 2005 which permitted only Indian and Pakistani flagged vessels to carry cargo between the two countries and did not allow the same vessel to carry consignments to a third country from the ports of either country. Another reason was the presence of only one rail route for cargo movement between the two countries and absence of a road based trade route till 2005.

The bilateral trade dialogue that had started in 2001 continued till 2007 and resulted in three outcomes — expansion of the Positive List, opening of the road route in 2005 and amendment of the restrictive maritime protocol. Following the Mumbai attack in November 2008 the composite dialogue was stalled. It resumed after a hiatus of three years.

The fifth round of talks in 2011 laid down the blueprint for normalizing trade relations between the two countries. The negotiations centred round Pakistan granting M F N status to India and India addressing non-tariff barriers faced by Pakistan. Pakistan made a transition from the Positive List approach to a small negative list of 1209 items. India took a number of steps to address non-tariff barriers.

The inauguration of the Integrated Check Post at the Wagah-Attari border in April 2012 and the signing of crucial agreements like the Bilateral Visa Agreement, redressal of trade grievances. mutual recognition agreement and customs co-operation agreement are additional steps the two nations have taken to boost trade.

This survey was undertaken to understand the ground realities faced by the stake-holders, attempts to gauge the views of traders on the awareness of these policies and the extent of impediments faced by the businesses.

One of the major results of the survey is that there is a general optimism regarding the improvement of key indicators that will enhance trade in the coming years. Majority of Indian exporters expect the growth of exports to be higher than 10 per cent for agricultural commodities, agricultural chemicals, engineering and mechanical goods. Pakistan’s imports from India are expected to increase by more than 10 per cent for chemicals, pharmaceuticals and jewellery.

Higher proportion of Indian importers expected imports from Pakistan to increase by more than 20 per cent for dry fruits and sugar. Pakistan importers expected a more than 20 per cent increase in exports for dates, sacks and gemstones.

Majority of Indian exporters and importers expect the trade to increase for all modes except the road port for Indian exports which is expected to witness 25-50 per cent growth. A majority of Pakistani traders expect an increase of over 50 per cent by the sea and road ports.

The survey has rich statistical data presented very colourfully and has important policy recommendations to enhance trade. Major among these are  i) the negative list of 1209 items should be abandoned and Pakistan should allow all items to be imported from India via road route, ii) encourage inter action of traders via a web portal, iii) large logistic service providers with requisite expertise, iv) increased availability of rail wagons and v) containerized cargo by road and rail.

This is a valuable survey by authorities in ICRIER which will help bring the two nations together.

P.P. Ramachandran

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