Pak-India trade potential remains unexploited

Friday, December 18, 2009
By Mansoor Ahmad

LAHORE: Actual trade potential of Pakistan and India remains unexploited as it is tilted overwhelmingly in favour of India which refuses to import Pakistani goods by road while Islamabad has granted some permission.

India-Pakistan trade is unnaturally small, currently about $2.3 billion a year. Pakistan accounts for less than one per cent of India’s total trade, and Delhi accounts for less than five per cent of Pakistan’s overall trade.

India enjoys a huge trade surplus with sales to Pakistan of around $1.90 billion against imports of less than $300 million.

Experts point out that with transportation cost increasing, it is more feasible for the two countries to conduct trade through road instead of adopting sea route that results in heavy transportation cost.

Lahore Chamber of Commerce and Industry’s former vice president Aftab Vohra said if chemical machinery manufactured in central India is needed in Lahore, it is imported through sea. It means it will first go to Bombay by road, then it will come to Karachi and from there it will be shipped to Lahore or any other destination in Punjab or the NWFP.

He said the whole process even if executed with full efficiency can take at least a week. The same item can be brought at the Wahga border in a few hours and at a very low transportation cost and the same is true in case of Pakistani products needed in India, he said.

He said barring few items all trade between India and Pakistan at Wahga is conducted through train. He said trains come twice a week and space for goods is not freely available while import through trucks is not allowed.

The News has found that the government of Pakistan has granted permission for import of cotton and soybean meal through trucks. He said vegetables and livestock are also allowed through road but import of these items from India has almost stopped after recent bad crops there due to drought in some areas.

Pakistan exports a large quantity of cement to India through the Wahga border. It has been found that exports are much below the Indian demand because exports are only allowed through train. Bogies are not available according to demand.

The Indian government does not allow import of cement or for that matter any item through Wahga.

“This is one reason for the huge surplus that India maintains against Pakistan,” said Mian Zaheeruddin, a Lahore-based trader.

He said the demand for cement in India is so high that if its exports are allowed by truck this single item alone could wipe out the entire trade surplus that India enjoys against Pakistan.

He said the government of Pakistan has shown some flexibility in this regard but the Indians remain stubborn and discourage imports from Pakistan.

There is huge demand for Pakistani yarn and fabric in India and if export of these items by road is allowed by the Indians it will reduce cost drastically as saving in terms of freight will be enormous, he said.

He said cost of export and import increases substantially due to higher freight charges in Pakistan and India because duties are charged on the value of items and their freight.