EXPORTERS from India, who have seen a steady growth in the sales of goods and commodities to Pakistan in recent years, are eagerly monitoring electoral developments in the neighbouring country.

Indian business enterprises, especially those in Mumbai, Delhi and other parts of western and northern India, are all for political stability in Pakistan, as they hope for increased trade ties.

Bilateral trade between the two countries adds up to around $2.2 billion, though the figure doubles if one considers exports from regional hubs including Dubai.

Ajay Bisaria, the Indian High Commissioner to Pakistan, had revealed a few weeks ago that bilateral trade (including deals done through third countries) adds up to about $5bn. If relations between the two sub continental nations normalise, this could jump to $30bn, he had claimed while addressing the Lahore Chamber of Commerce and Industry.

“We should not talk about negative and positive lists,” the Indian diplomat had said. “Rather, we should work on the windows of opportunities. At present, over $5bn trade is being done through a third country but after removal of non-tariff barriers, liberalisation of visa and normalisation of mutual relations, the two-way trade could touch a high $30bn.”

With bilateral trade higher than $2bn, Indian business enterprises are all for political stability after the elections in their neighbouring country, as they hope for increased trade ties

The July 25 elections to Pakistan’s national and provincial assemblies — which will witness nearly 12,000 candidates battling for a total of 849 seats (including 272 general seats of the National Assembly) — have drawn considerable attention in the political and business corridors of India.

And even in Pakistan, bilateral ties with India continue to crop up among the top political leaders, though many prefer to remain tight-lipped about their strategies.

Shahbaz Sharif, the Pakistan Muslim League-Nawaz president and the prime ministerial candidate from his party — and younger brother of former Prime Minister Nawaz Sharif — is one of the few top politicians wanting better ties with India.

“The Singapore summit between the US and North Korea should set a good precedent for Pakistan and India to follow,” he tweeted recently. Sharif wants the two neighbours to resume dialogue, especially in the wake of the historic meet between US President Donald Trump and North Korean leader Kim Jong-Un.

In India, while the ruling Bharatiya Janata Party (BJP) wants to be seen as a party that takes a “tough” stand towards Pakistan, the National Democratic Alliance government which it heads, like its predecessor, the Congress-led United Progressive Alliance, wants closer trade ties.

Of course, India is keen on expanding trade ties with Pakistan, especially as it has for the past two decades dominated bilateral trade in terms of growing exports.

India’s exports to Pakistan added up to less than $300 million in 2003-04, while imports amounted to less than $60m. This shot up to $1.35bn in exports in 2006-07, and even imports from Pakistan surged to $325m.

Exports to Pakistan topped in 2013-14 to $2.275bn (and bilateral trade touched $2.7bn), while imports from the neighbour peaked at $542m in 2012-13.

WHILE the cementing of ties between the two neighbours is still a long way off, cement as a commodity is playing an increasingly major role in the relationship.

India has emerged as the second-largest market for Pakistan’s cement exports. Last year, cement supplies to India surged by more than 26 per cent and the commodity accounts for a 27pc share of total exports to India.

Cement is increasingly emerging as a major commodity from Pakistan, especially with domestic producers in India unable to meet the growing demand for it.

Pakistan’s cement exports topped $200m between July 2017 and May 2018 (slightly lower than the corresponding period in the previous year). The biggest markets were Afghanistan and India.

India also imports significant quantities of light oils and preparations, aluminium ores and concentrates, gypsum, seeds, leather, denim and yarn from Pakistan.

Cotton is the largest commodity that it exports to Pakistan. Cotton exports from India to Pakistan added up to nearly 1.2m bales by May, making it the second-largest buyer of Indian cotton.

However, with China — the world’s second-largest producer of cotton — expecting lower production this year, it is likely to buy about 4m bales from India in the current fiscal.

India’s cotton shipments are expected to top 7m bales in marketing year 2017-18 (October to September). According to Atul Ganatra, President of the Cotton Association of India, Indian cotton prices are 10pc lower than international prices, leading to growing demand.

Other major items imported by Pakistan from India include paraxylene, polypropylene, single yarn of combined fibres, tomatoes, refined sugar, woven fabrics and vaccines for human medicine.

In a bid to boost bilateral trade, India granted the Most Favoured Nation (MFN) status to Pakistan a few years ago. However, Pakistan has not yet given the MFN status to India so far.

Analysts, however, believe that even after the new government takes over in Pakistan later this month, business ties with India are unlikely to improve further, thanks to the 2019 elections in the country.

The Modi government does not want to be seen close to Pakistan and trade concessions are unlikely to take off till well after the 2019 elections. The Congress and its partners would of course want to deepen trade ties with Pakistan, but if the BJP emerges as a powerful opposition party, it would not want to push ahead with closer ties — political or business — with Pakistan.

Published in Dawn, The Business and Finance Weekly, July 9th, 2018