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In this picture taken on Feb 20, goods trucks are pictured at the border town of Chakothi in Azad Kashmir, some 3 km from Line of Control (LoC). Following the Pulwama attack, India revoked MFN status to Pakistan and slammed 200 per cent import duty on imports—AFP
In this picture taken on Feb 20, goods trucks are pictured at the border town of Chakothi in Azad Kashmir, some 3 km from Line of Control (LoC). Following the Pulwama attack, India revoked MFN status to Pakistan and slammed 200 per cent import duty on imports—AFP

ISLAMABAD: The volume of Pak-India bilateral trade posted a growth of nearly five per cent in the first seven months of the current fiscal year from a year ago despite border tension for the past few months between the two countries, Dawn has learnt.

Following the attack, last Friday New Delhi withdrew the MFN status to Islamabad, which it granted in 1995. The grant of this status means that a country will treat all WTO member states equally in matters of tariffs on imports. A day later, it slapped 200pc import duty on Pakistani goods.

It is still unclear how much the tensions – which have now escalated to a new high in the backdrop of Pulwama attack – will affect the flow of bilateral trade.

However, the Indian government’s decision to impose 200pc additional duty will bring them no tangible results as Pakistan’ annual exports to the country are worth few million dollars.

Bilateral trade grew 5pc in first seven months of FY19; 80pc of this was New Delhi’s exports to Islamabad

However, trade statistics, available with Dawn, show a complete picture that New Delhi will feel the pinch of the current stand-off. The total aggregate volume of bilateral trade between July-January 2018-19 has reached to $1.122 billion, up by 4.96pc from $1.069bn over the corresponding period of last year.

The first seven-month data of this fiscal year shows that Indian exports to Pakistan constitute 79.33pc of the total bilateral trade volume.

This composition exists even in the annual trade between the two countries.

Pakistan imports from India between July-Jan 2018-19 has reached to $890.05m from $871.71m over the corresponding period of last year, showing an increase of 2.11pc. Pakistan’s imports have already entered negative growth with almost all countries except India.

In the year 2017-18, Indian exports to Pakistan have reached $1.84bn as against $1.64bn over the previous year, showing an increase of 12.2pc.

The product wise details show that in the first seven months Pakistan imported $97.77m worth p-Xylene (an important chemical feedstock) as against $41.33m over the corresponding months of last year, showing an increase of 136.56pc. The second biggest imports from India are of polypropylene (a thermoplastic polymer used in a wide variety of applications) which reached to $36.73m this year as against $38.76m, showing a decline of 5.24pc.

The third importable product reactive dyes and preparations based thereon stood at $30m as against $26m over the last year, showing an increase of 15.4pc. The fourth product includes pharmaceutical imports which reached to $26.4m as against $12.23m over the last year, showing an increase of 115.8pc. The import value of 12 products ranges between $10m to $24m during the period under review.

The import value of other 84 products remains less than $10m during the July-Jan 2018-19. Most of these products value even less than $5m.

Pakistan’s exports to India reached $231.98m during the July-Jan 2018-19 as against $198.05m over the corresponding period of last year, indicating an increase of 17pc. It clearly shows that Pakistan’s exports to India are less than half of the imports during the period under review.

The product wise details show that Pakistan exported nearly $70m worth fresh fruits to India during the first seven months of the current fiscal year from a year ago. These fruits include dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried.

Cement exports to India stood at $34m during the July-Jan 2018-19 as against $37.6m over the corresponding months of last year, showing a decline of 9.6pc. The third biggest exports to India are Sesamum seeds, which reached to $13.56m during the period under review as against $0.43m, showing a hefty growth of 3053pc.

The fourth biggest exports figure to India is of gypsum which reached $10.5m as against $9.4m over the corresponding period last year, showing an increase of 11.7pc. The net volume of 96 products remains below a value of $5m during the period under review.

In the year 2017-18, Pakistan’s annual exports to India have reached to $342.44m as against $340.78m from a year ago, indicating a meagre growth of 0.49pc.

In March 2012, Islamabad placed 1,209 items on the negative list and opened up rest of the products for trade with India. Before that decision, Pakistan used to trade with India only in 1963 items.

Pakistan’s exports to India stood at $288.134m in 2004-05 and reached $340.78m in 2016-17 in the wake of liberalisation of the trade regime with India. Indian exports to Pakistan were $547.458m in 2004-05 and shot up to $1.64 billion in 2016-17.

The unilateral trade liberalisation in goods and services, after resumption of the composite dialogue in 2004, benefited India whereas Pakistan’s exports stagnated. The tripling of exports to Pakistan is despite the fact that Islamabad has placed 1,209 products on the negative list.

In the wake of the Pulwama attack, India has withdrawn Most Favoured Nation status. However, Pakistan has not reciprocated it as yet of today.

When approached the Secretary Commerce Younus Dagha told Dawn that Commerce Division has already worked out different options. However, he did not disclose the details. “No plan yet to announce it anytime soon” he said, adding “But we will give a measured response whenever the government also decides”, the secretary responded to another question.

Aamir Shafaat Khan from Karachi adds: Amid threats by Indian traders to halt exports to Pakistan, local importers are urging the government to impose duty on Indian tea imports.

As per foreign media reports, Indian Tea Exporters’ Association (ITEA) had threatened to stop shipments to Pakistan if Indian government shuts the door on bilateral trade. The nation and the security of our forces and fellow countrymen comes first and commerce is secondary, ITEA said adding exporters would support any decision by the central government in retaliation for the attack that was the worst-ever in Jammu and Kashmir against the forces since militancy erupted in the state in 1989.

In response to ITEA’s threat, Chairman Pakistan Tea Association (PTA) Shoaib Paracha told Dawn, “We strongly urge the government to impose heavy import duties on Indian tea so that it cannot find way into our country.”

High import duty on Indian tea would hardly make any impact in tea blending process as the share of Indian tea in total imports of black tea is 8pc.

However, the share of Indian tea in total imports had risen to 8.45pc in 2018 out of total import of 189,809 tonnes. The share of India tea in 2016 and 2017 was 6.77pc against total imports of 172,910 tonnes and 173,994 tonnes, respectively.

Pakistan imports tea from 24 countries for blending purpose in which the share of Kenya is 70pc. Cumulative taxes and duties on import of tea come to 43pc. A sizable quantity of black tea also arrives from informal channels.

Mr Paracha said local traders will support the government if any strict decision is taken as Pakistan’s integrity stands first above all trades and relationship.

Published in Dawn, February 24th, 2019