Wagah border trade can boost India-Pakistan relations
Davinder Kumar Madaan
Trucks carrying tomatoes cross over to Pakistan at Wagha. A Tribune file photo
THE recent meeting of the Commerce Minister of Pakistan with his Indian counterpart on the margin of the 5th SAARC (South Asian Association for Regional Cooperation) Business Leaders Conclave in New Delhi decided that Non-Discriminatory Market Access (NDMA) and normal trade relations between India and Pakistan would be implemented by the end of February 2014. Both countries agreed to open the Wagah-Attari Land Customs Station operational on all seven days of each week, and liberalisation of the business visa regime. Further, on January 22, 2014, Pakistan approved the signing of a Memorandum of Understanding (MoU) for a deal to buy electricity from India for which an inter-connection will be built between Amritsar and Lahore. Earlier, India offered to export electricity to the tune of 500 MW to Pakistan. In fact, the important milestone for their mutual trade took place on March 20, 2012, when Pakistan switched over from this Positive List of 1,963 items to the Negative List of 1,209 items that cannot be imported from India. Thus, more than 7,500 items became importable from India. All steps by the two countries are expected to accelerate the process of their mutual trade relations as there are tremendous gains due to their geographical proximity and contiguity of territories, which can help in saving the transportation and transhipment costs.
Though enormous trade potential between India and Pakistan exists, still they realised less than 8 per cent of the potential. Nearly 70 per cent of what Pakistan consumes is from imports, but its imports from India are very less. During 2012, the official trade between India and Pakistan could have increased from US$ 2.1 billion to US$ 29.8 billion (14.2 times), provided both had removed certain irritants in the way of trade. Pakistan's tariff on import from India was as high as 100 per cent on black tea, 70 per cent on cardamoms, 31.9 per cent on woven fabrics, and 30 per cent on tomatoes, chickpeas and cumin seeds. India's tariff was as high as 42.8 per cent on cotton fabrics, 30 per cent on sesamum seeds, and 24 per cent on dates.
The Wagah border is very important for exploiting the trade potential between India and Pakistan. During 2012-13, 34 per cent of the total bilateral trade was via this land route. Both countries resumed the truck movement at the Attari/Wagah border on October 1, 2007. With the inauguration of the Integrated Check Post (ICP) on April 13, 2012, the number of trucks crossing the Attari/Wagah border increased from 51 in 2009-10 to 207 per day in 2012-13. The items imported included cement, chemicals, gypsum, dry dates, dry fruits, float glass, marble stone and sand. The items that were exported to Pakistan were potatoes, tomatoes, onions, cotton, meat, ginger, garlic, green chillies, soyabeans, newsprint, polypropylene, carbon dioxide in liquid form, etc.
Unfortunately, Pakistan has a Positive List that allows only 137 items for import through the land route of the Attari-Wagah border from India. But the potential is huge from Punjab and North India. These 137 items include livestock, meat, vegetables, raw jute, cotton yarn, pineapple, black pepper, raw cane & beet sugar, oil cake, cement & clinker, pure terephthalic acid, polyethylene, polypropylene, newsprint, paddy harvesters and dryers. The actual potential will be exploited when Pakistan expands its import list, which could open a gateway of opportunity for Indian Punjab. It will open a new era for the industrial development of Indian Punjab. The industries like hosiery, textiles, carpets, blankets, shawls, engineering units, tractors, auto parts, metal and alloy, bicycles, foundries, sports, steel, etc. will flourish. The new Guru Gobind Singh Refinery in Bathinda could also export petroleum products to Pakistan through the land route.
In fact, India and Pakistan were highly dependent on each other for trade during the time of partition on August 14, 1947. Right from partition, Kashmir has been a bone of contention between the two countries even after four wars of 1947-48, 1965, 1971 and 1999. As such, both India and Pakistan resorted to deliberate measures to minimise their trade dependence on each other, and were forced to import many items from the world market at much higher prices. In 1948-49, India's share in Pakistan's global imports was 50.6 per cent, which went down to 4.6 per cent in 2012-13. Pakistan's share in India's global imports was 1.1 per cent in 1951-52, which went down to 0.1 per cent in 2012-13. There was an embargo on bilateral trade during 1965-74.
SAARC, established on December 8, 1985, has played an important role in boosting the trade ties between India and Pakistan. It led to the establishment of SAFTA (South Asian Free Trade Area) on 1st July. The base rate tariff for sensitive lists will be reduced to 0-5% by 1st Jan 2015 under SAFTA Phase II. Though the average annual trade between them was US$ 492 million only during 1975-2012, but in the post-SAFTA period (2006-12), it increased to US$ 2,016 million.
Both India and Pakistan should resolve their political problem on Kashmir and exploit their vast mutual trade potential on the pattern of the Indo-China model. Since war divides and trade unites, the time has come to gain from each other. The opening of more land routes between them will give a big boost to trade and bring down freight cost. Therefore, trade traffic can be encouraged through the Hussainiwala, Khem Karan, Fazilka, Amruka, and Karachi routes in Punjab, and other land routes in Rajasthan, Gujarat and Kashmir. Earlier, all these trade routes were operational. With the grant of MFN/NDMA status to India, Pakistan can legalise the unofficial importable goods through third countries, which are worth more than $10 billion per annum. It will increase the customs' revenue of Pakistan. The promotion of trade relations, joint-ventures, joint marketing, joint study groups on trade and other issues, strengthening of SAARC, joint patrolling of the LoC, frequent meetings of civil and political bureaucrats and political leaders, people-to-people contact, a liberal visa regime, etc., could be some formidable steps towards confidence-building exercises between India and Pakistan.
The writer is the Professor-cum-Programme Coordinator (South & Central Asia), CRRID, Chandigarh
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