The temporary suspension of trade between India and Pakistan, following the escalation of tension after minor border clashes in the northern region, resulted in at least 10 per cent loss to total bilateral road trade.

The business community fears that their loss of confidence owing to sudden trade shutdown would be more damaging.

The Indian corporate sector expected trade between the two countries to dip by as much as 20 per cent during FY13 because of a variety of factors including the current setback.

For bilateral economic cooperation particularly between the two major complementary economies in South Asia, that is supposed to benefit the teeming millions on both sides of the border, Pakistan and India need to put in place a mechanism that ensures uninterrupted trade flows in times of diplomatic tensions.

"I was in two minds about a deal worth $100 million that I am about to lock for import of machinery by road from a manufacturer in India. My partner in Delhi also got depressed as, for us, there was no turning back once we had put our signature on the dotted line. We decided to go ahead with the process in the end but with a heavy heart", a cement manufacturer told Dawn over telephone from Lahore.

He found the idea of a regional guarantee agency very exciting. "You must project such doable options as they would go a long way to address doubts in the business communities of the two countries and give them confidence to aggressively explore business options in the region", he asserted.

Another businessman with interest in mining was critical of politicians who, he said, do not hesitate to keep the real economic potential of the region hostage to their electoral politics.

"Even comparatively saner elements tend to resort to rhetoric for political considerations. Close to elections, the idea of an outside enemy suits the government to divert the attention of masses from their own failings to address pressing economic problems of capital generation and equitable income distribution. It also puts jingoistic firebrand leaders on the back foot", he reasoned.

He appreciated that PPP government which, in the past, championed ultra nationalism for showing restrain at what he termed ‘over reaction to an unfortunate isolated incident from the other side’.

"I am not too big a fan of the government but credit for containing hostilities and the quick revival of trade goes to PM Raja Pervez Ashraf and his colleagues who refused to enter the ring for trading insults with India though they did get multiple opportunities", he added.

Some 200 goods carriers cross border every day at two entry points at Wagah in Punjab and Poonch in Azad Kashmir. After a three-week suspension, goods truck traffic was resumed on January 29.

The representatives of the powerful private sector of India with stakes in the peace process did show restrain, a deviation from their earlier practice when they used to be in the forefront to plead for pseudo nationalistic causes.

They spoke against the escalation of tension and advised their government to be heedful of the collateral damage to trade and commerce when projecting its position.

The Associated Chambers of Commerce and Industry of India (Assocham) Secretary General D. S. Rawat is reported to have said: "If things are not handled diplomatically, it may lead to serious disruption of trade with Pakistan particularly, and SAARC region generally."

"The bilateral trade may dip 20 per cent in 2012-13 due to the current disturbances", he contemplated. Assocham said in 2011-12 the bilateral trade stood at $1.9 billion. Indian export to Pakistan in the last fiscal declined by 25 per cent to $1.5 billion; however, imports from Pakistan grew by 48 per cent to $400 million. It also identified some sectors in India that would take the brunt that included food processing, IT, sports goods and textiles.

The bilateral trade potential in the relatively short run is said to be $10 billion or about five times the current level. Pakistan currently exports gypsum, cotton yarn, cement, leather products, textiles, masala, surgical instruments, paper, vegetables and fruits to India.

Contacts were made in Saarc Chamber of Commerce and the federal ministry of commerce in Islamabad to ascertain the total loss in three-week-closure of trade with India based on real time data. Unfortunately, the exercise has either not been undertaken thus far or the ministry was reluctant to disclose its position on the issue.— Afshan Subohi