AnalysisIndian Subcontinent

Ides of trade between India and Pakistan

By Rama Rao Malladi

Speaking to the media in Washington on Oct 28, 2024, Pakistan Finance Minister Muhammad Aurangzeb said: ‘Not trading with your neighbours does not make sense’. The media interaction took place as he was packing his bags to return home after attending the annual IMF-WB Fall meetings. 

Editorially commenting a day later, the News International said his remarks ‘echo a pragmatic perspective that Pakistan can no longer afford to ignore’.  Pakistan’s struggling economy demands ‘creative, strategic solutions’, the daily observed, and noted there is ‘a growing recognition among policymakers that regional trade might be one of them’. 

Though the Minister had quietly slipped in a caveat that any ‘political connotations’ or ‘geopolitical discussions’ involved were beyond his domain, local media considered his remarks as sensible. 

And went to the town with the observation that Aurangzeb, a leading banker and son of legal luminary, Chaudhry Muhammad Farooq Ramday, who served twice as the Attorney-General for Pakistan, clearly wants a rethink on trade with the ‘linchpin of any substantial regional economic collaboration’. 

Before the trade suspension in 2019, Pakistan was importing over $2 billion worth of goods annually from India, including essential items like animal fodder and pharmaceuticals, at prices hard to match elsewhere. 

Today, Indian goods still reach Pakistani markets by circuitous routes, inflating prices for consumers without providing Pakistan with any of the formal trade benefits, according to a leading Pakistan daily.

It is too early to say whether Aurangzeb -speak reflects the thinking in the corridors of power in Islamabad and its twin city Rawalpindi. More so because, this is not for the first time that a high-level functionary has spoken publicly on matters of trade with India.  

Some six months ago, on June 25 to be precise, Deputy Prime Minister Ishaq Dar, advocated for the normalisation of relations with India with usual caveats though, while speaking at the 51st founding anniversary of the government-run Institute of Strategic Studies, Islamabad, (ISSI). 

His comments, to quote Dawn, the sedate English daily, ‘marked Pakistan’s first formal articulation of its policy towards India under Modi’s third term, following an initial period of wait and see’.   

Pointing out that the region lags far behind on human development indices, beset by poverty, unemployment, illiteracy, disease, food and water scarcity, natural disasters, environmental degradation, and climate change, he stressed that collective action was imperative to address these pressing challenges, rather than perpetuating a cycle of hostility. 

In a sense, these views echo the usual stand of his master, Nawaz Sharif, to whom he is the most trusted economic wizard. Businessman – turned – politician, Nawaz has been a consistent advocate of turnaround in relations with India. On December 9, 2023, the ruling Pakistan Muslim League- Nawaz (PML-N) supremo, made an impassioned plea for mending relations with upset neighbours. ‘This is crucial for Pakistan’, he said in Lahore at his party’s parliamentary board meeting and asked ‘how the country can achieve a global status while there are disagreements with bordering nations’.

In a manner of speaking, Ishaq Dar is also consistent on trade with India. On March 23, in a media interaction in London, he said in so many words that he stood in favour of resuming trade ties with India, which he noted were suspended in 2019 by Imran Khan regime over the Kashmir issue. 

‘Everyone’s appeal (in the business community) is the same that our imports, which are still ongoing, arrive via Dubai or Singapore, [resulting in] extra freight, extra transhipment, transportation costs, etc”, he noted and added: ‘So we will seriously examine this. All of us stakeholders will sit together and see what can be done about it’ 

Now cut to Dar’s political rival and former Pakistani finance minister Miftah Ismail. He argues that Pakistan should follow the example set by China -Taiwan and India -China in matters trade with India.  He built his case around Kashmir. ‘We are no closer to getting Kashmir back than before the (trade) ban’, he says, adding that stopping trade ties with India had not been politically successful. An economically strong Pakistan can represent the wishes and aspirations of the Kashmiri people a lot better in international forums than a weak Pakistan, he contends.

But does opening up trade with India mean Pakistan’s exports will increase? Doubtful because reports in Pak media say there is anecdotal evidence that suggests an innate bias in India against products labelled ‘Made in Pakistan’. 

Imports from India will, however, benefit Pakistan, according to Almas Hyder, former president of the Lahore Chamber of Commerce and Industry. 

In his estimate, about $1bn machinery imports (out of a total of 10bn) and $1bn raw material imports (out of a total of 10bn) can be sourced from India annually with freight costs coming down to $300 to $400 per container – from around $3,000 to $4,000 per container for imports from further away. ‘Bangladesh success story in part lies in importing machinery majorly from India’. 

Apparently taking cue from these arguments, a Karachi daily says, ‘Pakistan’s emerging tech industry stands to gain from collaboration with India’s mature technology sector. A cooperative technology exchange between Pakistan and India could not only fuel growth on both sides but also foster solutions to regional issues around digital infrastructure, cybersecurity, and data protection. Trade in services, particularly tech, could also create a platform for young talent to work collaboratively across borders, leveraging Pakistan’s growing pool of tech professionals alongside India’s established industry’.  

Clearly, the leader writer is having Alnaskar’s dreams! 

And is unaware of the ides of March 2021, when a plan to allow the private sector to import 0.5 million tonnes of white sugar and cotton from India via the Wagah border was rolled back following criticism from quarters that matter.

(Rama Rao Malladi is a Delhi-based senior journalist and commentator, and is now consultant to the Deccan Council for Strategic Studies)