Trade and Tensions Between India and Pakistan
Trade and Tensions Between India and Pakistan: Chaudhry Bashir Arain, a trader from Khairpur, exports nearly all of his dried dates to India through Dubai. This delivery takes about 40 days. The trade route changed in February 2019 after the Pulwama attack when India stopped trading with Pakistan, imposed a 200% tax, and removed Pakistan’s Most Favoured Nation status.
Before that, trade had been happening across the Line of Control (LoC) since 2008. But India stopped it, accusing Pakistan of smuggling drugs and weapons, while Pakistan suspended trade after India took action on Kashmir’s special status.
Arain, who heads the Khajoor-Anaj Market, said that when trade passed through Wagah-Attari, goods reached India in eight days. But the long sea journey harms the quality of products. His frustration highlights the ongoing tensions between the two countries.
Improving Trade Ties
Nikita Singla, an expert on international trade, believes that better trade ties could help improve relations between India and Pakistan. She points out that in 1948-49, Pakistan exported over half of its goods to India and imported 32% from there.
After India suspended trade in 2019, Singla discovered that about 50,000 people in Amritsar and nearby areas were affected by the change. People in Uri and Poonch in Pakistan also felt similar effects. Before 2019, trade across the LoC was valued at $1.2 billion and created over 170,000 jobs.
South Asian Trade Potential
The World Bank’s Cecile Fruman has also highlighted that regional trade in South Asia has great potential. However, current trade costs are 20% higher than in Southeast Asia. Despite this, Fruman believes that better transport links could boost economies in Bangladesh and India.
For trade to grow between India and Pakistan, Singla stresses the importance of rebuilding trust. One possible way to restart trade is for both countries to commit to the South Asian Free Trade Area (SAFTA) agreement. But Dr. Huma Baqai, an expert on trade, says the real issue is political will, as both countries need stronger and clearer trade frameworks.
Singla also suggests making trade more transparent and collaborative, with a joint trade portal. Examples of successful trade in the region, like the energy deal between Nepal and Bangladesh in 2024, show that cooperation is possible even when relations are tense.
Despite political tensions limiting trade between India and Pakistan, recent signs of improvement, such as the reopening of trade with Bangladesh, offer hope. If India and Pakistan can put aside their differences, they could work towards a more prosperous future for the region.
Published in Dawn, 12th March 2025
