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Outlook for India-Pakistan trade

Updated March 17, 2014

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- File Photo
- File Photo

India will go to the polls between April 7 and May 12. Analysts widely expect the polls to throw up a BJP-led coalition headed by Hindu nationalist leader Narendra Modi.

What will Modi’s ascension to the top political office in Delhi mean for Pakistan’s trade relationship with India? Should Islamabad, which has recently linked the grant of non-discriminatory market access to Indian goods, especially through Wagha-Attari land route, to resumption of the stalled composite dialogue, be worried?

Apparently, businesspeople on both sides of the border as well as trade officials don’t really see Modi’s expected victory as a threat, or even a setback, to the process of bilateral trade normalization.

Conversations with Indian businessmen in Amritsar in December and in Lahore last month show that his victory could be ‘blessing in disguise’ for the ‘now on now off’ trade talks.

“Modi is a doer. If he realises that trade with Pakistan is in India’s best interests, he will not let any issue, ideology or person impede it,” a businessman from Amritsar had told this writer. “He takes just a few minutes to take economic decisions if he is convinced.”

Many Indian businessmen share his assessment of the man who can often pledged to be ‘tough’ with Pakistan after his nomination as his party’s candidate for India’s premiership.

Improving trade relations with India is the key priority of the Nawaz Sharif government, which sees liberalisation of bilateral trade across Wagah-Attari as one the several ‘game changers’ for the country’s economy listed in its election manifesto. Ever since coming to power it has strived hard to revive the stalled trade negotiations with Delhi.

The hopes of an early normalisation of trade across the border got a major boost when commerce minister Khurram Dastgir Khan met India’s trade minister Anand Sharma on the sidelines of a Saarc business conclave in January. After commerce secretary level talks, the two ministers agreed to keep the Wagah-Attari trade route operational 24 hours a day seven days a week, work out modalities for containerisation of cargo, allow all tradable items by the only land route and liberalise business visa regime.

Pakistan also agreed to scrap negative list of items that cannot be traded and replace it with a much smaller list of 100 sensitive items, virtually giving India the non-discriminatory market access as an alternate to politically controversial MFN status. The agreed measures were to be implemented before the end of last month.

But Pakistan later refused to implement these measures, blaming Delhi for failing to execute its part of the agreement that required it to dismantle several tariff and technical barriers hampering access of major Pakistani exports like textiles into the Indian market.

Speaking at the inauguration of the India Show, Dastgir linked the implementation of all the agreed measures to the resumption of the composite dialogue, saying the commerce ministers could facilitate the process to a certain extent only.

Many said the move to link the trade normalisation process with the resolution of the other bilateral territorial and political disputes to have been taken under the military’s pressure. The government denies it.

A commerce ministry official told Dawn from Islamabad that the process to implement the measures agreed by the ministers was stalled because of India’s failure to meet its part of the commitment and not under the army’s pressure. “The security forces and the government are on the same page as far as I know of,” he said. He also sought to dispel reports that India had agreed to address Pakistan’s concerns before end of this month in return for non-discriminatory market access to its exports.

”We are doing our home work to protect our economic interests and industry; they are doing theirs. Both are very much committed to overcoming the hurdles in the way of free trade and discussing how to move ahead in such a way that no country gets hurt by opening up of trade. But it is premature to say when will we be able to surmount the impediments to the process,” he said.

The official also downplayed fears of derailment of trade talks if Modi wins the Indian elections. “I have only comment to make: when it comes to economic and political relationships between the two countries, individuals or domestic politics just don’t matter. What matter the most are national interests,” he said in reply to a question.