The statement by Indian Foreign Minister Parnab Mukerjee on Safta’s future in absence of co-operation he seeks from Pakistan or the threat held out by Pakistan’s Railway Minister to stop operation on Sindh-Rajasthan sector if India does not start its train service, are meant to cajole each other to move forward more speedily. These indicate some impatience with the pace of progress, made by either side, towards a mutually agreed direction.
It also indicates, as seen at the political level, the interest of the two sides do not coincide in some areas in the immediate context. Yet, the changing global trade trends leaves them with no or very little option but to forge closer trade ties.
These statements from the two senior politicians of India and Pakistan notwithstanding, the two neighbouring countries have recently taken three important decisions that will serve as catalysts for expanding their bilateral trade.
First, the ratification by Indian cabinet on October 28 of a protocol of direct shipping link between the two countries; second, a decision to resume cargo service between Indian and Pakistani Punjab and on the Sindh- Rajasthan sector; third, the move to open branches of two banks in each others’ countries.
Pakistan included more than 300 items early this month in its positive list for trade with India. “It means diversification of more than a billion dollar global import towards India,’’ remarked an executive of a giant chemical multinational who added that the list includes dyes and chemicals needed by Pakistan’s textile industry.
Within days after these announcements, Indian and Pakistan businessmen got busy in setting up warehousing facilities for dyes and chemicals at Lahore and Karachi.
“With the operation of direct railway cargo service and permission to import dyes and chemicals from India, we will save on freight, we will get a quick delivery. It will enable us to maintain a week or 10 days inventory rather than for three months’ period that we are presently doing while importing from Europe’’ said Mirza Ikhtiar Baig, a denim manufacturer whose product needs lot of dyes and chemical inputs.
Indian software houses are meanwhile exploring outsourcing a part of their international job to Pakistani companies. “It is wrong to assume that Indo-Pakistan trade is a one way affair” Baig said. Indians too need to share part of their commitments with Pakistanis and are desperately looking for partners at Karachi and Lahore. Pakistan Software Association leaders are in consultation with their Indian counterparts.
The bilateral trade volume is now close to $1 billion a year and businessmen look pretty confident of “at least 100 per cent rise in trade this year” says a Jodia Bazar trader. His optimism is based on increase of importable list from India, bilateral facilities like direct shipping, cargo train service and opening of bank branches.
A study of State Bank of Pakistan has recently projected two-way trade potential between Pakistan and India at more than $5 billion a year. The study is based on an analysis of items imported by Pakistan from countries other than India and available in India also. Indian global imports can be catered by Pakistan.
While the official two-way trade remains close to $1 billion, businessmen put volume of smuggling and circular trade through UAE at about $1-2 billion a year. ‘”The volume of trade—formal and informal, direct and indirect—is already worth about $3 billion’’, a Jodia Bazar trader said. Karachi’s famous Rainbow Centre in Saddar is a big ware house of smuggled Indian DVD’s of latest and old films, music and dance albums.
In Bombay Bazar, the shops display hoardings and billboards that offer packets of goods that can fetch between Rs5,000-10,000 in India. Called, “Done Trade’’ in business jargon, this is going on openly in India and Pakistan and beneficiaries are the hundreds of visitors.
Raees Ashraf Tar Mohammad, a leader of Pakistan importers based in Jodia Bazar, said that as many as half a dozen small and big launches sail between Karachi and Mumbai and Kundala in India. In May last year, Raees was in Mumbai with a goodwill delegation.
‘”The governments in India and Pakistan have no business to deny consumers the right to get goods and commodities in either of two countries at reasonable prices’’ he declared at a meeting amidst applause. His logic is simple. “Restrictions on trade promote smuggling because it is consumers’ right to get good quality goods at reasonable prices from anywhere’’.
Amjad Rashid, an international food trader doing relief and rehabilitation work in Afghanistan and Iraq holds bureaucrats of the two countries responsible for creating hurdles in two-way business.
“Now we should look beyond trade and explore signing some protocol to enter into joint venture arrangements’’. Amjad got an order to supply blankets to war-torn Afghanistan.
Pakistani blanket firms lacked the capacity to supply the order and so Amjad got these supplies from Amritsar and other parts of East Punjab.
The blanket industry in East Punjab is based on recycling and offers a piece at Rs150-200 that suits Pakistanis, while an average quality local blanket cost anywhere between Rs2,500-3,000. Those coming from Iran are somewhat cheaper. “ The Indian technology can create employment and provide blankets at affordable prices to local consumers,’’ argues Amjad.
Pakistan and Indian businessmen have suffered a lot because of their bureaucracies. Visas are difficult to get in Islamabad and Delhi. On most of the occasions, visas are denied without assigning any reasons. They are issued for specified cities rather than for the whole country.
Recently, an Indian journalist narrated in detail on website the hardships of Pakistani visitors invited by a Bangalore-based company to see their manufacturing facilities.
This company has set up a subsidiary in Dubai to service its customers in North Africa, West Asia and Central Asia. A few Pakistani companies came in contact with this firm and showed interest in doing business. Consequently, these businessmen were invited to India.
In India, these visitors were asked to report to police stations in which their hotels were located. “In one city, Pakistani visitors had to go to five different police stations because of their lack of knowledge about jurisdictions’, the journalist said..
“The experience of our Pakistani visitors with our bureaucracy was so horrendous that it was a real study in ‘how to repulse the visitors,’’ sums up the Indian journalist.
The communication between Indian and Pakistani businessmen is much easier than between businessmen of any two other countries because of the language. The market dynamics, customer expectations, cultural patterns, fashions and tastes for goods are almost same in the two countries.
These factors encourage big and small companies in India and Pakistan to explore new areas of cooperation. But bureaucrats and politicians miss no opportunity to create hurdles.
In Pakistan, the bureaucrats and politicians sit on decisions for giving MFN status to India.
Similarly in India, the politicians and bureaucrats want to keep Pakistan, Bangladesh and China away from any economic venture in their communication and infrastructure projects because of “security reasons.”