NEW DELHI: Sixteen months into a cautious peace process between India and Pakistan, two-way trade between the nuclear-armed neighbours is still an exercise in frustration and missed opportunities. Since the two stepped back in 2002 from the brink of what would have been their fourth war since independence from Britain in 1947, ties have warmed to the point that Pakistan’s cricketers are currently reciprocating a tour last year by the Indian team.
In another step forward, a bus service is due to start on April 7 across the heavily militarized ceasefire line that divides Kashmir.
Trade is improving, too, and is on course to rise more than 150 per cent in the financial year that ends this month to about $500 million, but the detente is spreading all too slowly for Indian businessmen.
Barriers to commerce cemented by more than half a century of hostility mean companies selling everything from wheat to tyres to Pakistan are forced into costly detours via third countries such as Afghanistan or the United Arab Emirates.
These indirect shipments are estimated to be at least six times greater than cross-border trade.
“Why should your textile mills be furnished with Indian machinery purporting to come from Dubai?” businessman Omkar Kanwar asked Pakistan’s trade minister, Humayun Akhtar Khan, at a forum on the sidelines of a weekend meeting of the G-20 alliance of developing-country trade ministers.
Khan’s presence brought together leaders of India’s four main industry lobbies, who, in a rare display of unity, took turns to air their grievances. Chief among these is that Pakistan is withholding most favoured nation (MFN) status, meaning it does not extend its lowest tariffs to India.
Mahendra Sanghi of the Associated Chambers of Commerce and Industry predicted two-way trade could reach $10 billion within five years of signing a free trade agreement.
GIVE IT TIME: Sanghi said India could buy cotton yarn, vegetables and sports goods from Pakistan and sell everything from tea to steel in return.
It’s the “everything” that worries Pakistan, whose $66 million worth of exports to India in the eight months to November were dwarfed by imports of $315 million.
Islamabad fears freer trade could only deepen the deficit.
Khan said there were problems in the way of granting MFN and urged patience while confidence-building measures — including a dialogue over whether Pakistan could meet some of India’s fast-growing energy needs — were still in their early stages.
“Let’s continue to build faith in each other,” Khan said. “Give it time. Don’t expect too much. A few months, a few years here and there, is not a very long time.”
But time is money. Rakesh Mittal of the Confederation of Indian Industry pointed out that China and Taiwan had not let heavy historical baggage stifle two-way trade, which now amounted to $80 billion a year.
The irony is that, while cross-border trade is stunted, India and Pakistan are working hand in glove to influence the course of world trade talks as members of the G-20.
“What we can do multilaterally in trade, we need to do bilaterally,” said Indian Commerce Minister Kamal Nath, adding India had to share responsibility for the barriers between them.
The frustration for the subcontinent’s businessmen is all the more acute because China illustrates the sort of opportunities that are going begging in Pakistan.
India’s trade with China soared 79 per cent last year to $13.6 billion. In 2001, it was just $1.8 billion.—Reuters
