CHAUDHRY Bashir Arain, a trader from Khairpur, exports over 99 per cent of his dried dates to India via Dubai. Delivery takes up to 40 days. The long-winded route for Pakistani chhuaras to India via Dubai started in February 2019 after the Pulwama attack, following which India suspended trade with Pakistan, revoking its Most Favoured Nation (MFN) status and imposing a 200pc duty.

That year, two events halted the small trade that had been ongoing. India stopped trade across the Line of Control (LoC) — active since 2008 — citing concerns over the alleged smuggling of drugs, arms and fake currency by groups from Pakistan, while Pakistan suspended it in response to India’s revocation of Article 370 and Kashmir’s special status.

Arain, president of the Khajoor-Anaj Market, said goods sent via Wagah-Attari reached India in eight days, while the long sea journey damaged the produce. His frustration highlights the volatile relationship between the two neighbouring South Asian nations.

Yet Nikita Singla, an expert in international trade, logistics, and inclusion, emphasises that it is commercial ties that are the key pathway to reconciliation. And there is a trade history too. According to her, in 1948-49, approximately 56pc of Pakistan’s exports were directed to India, while 32pc of its imports originated from there.

In 2019, after trade was suspended, Singla conducted a field survey in Amritsar and in towns along the LoC on the Indian side. “Nearly 50,000 people in Amritsar — including traders, custom house agents, gas station attendants, mechanics, dhaba owners, truck drivers and porters — were adversely affected by the suspension of trade via the Wagah-Attari crossing. Similarly, in the districts of Uri and Poonch along the LoC, nearly 25,000 people depended on this trade for their livelihoods,” she said, adding that cross-LoC trade was particularly unique as it was more of a “confidence-building measure” with trade based on a barter system. “Between 2008 and 2019, this was valued at $1.2 billion, generating more than 170,000 job days, and an exchange of more than 110,000 trucks with a freight revenue of about $9 million for transporters in Jammu and Kashmir,” said Singla. “It would be interesting to find out how Pakistan fares,” she added.

Across South Asia, there are examples of collaborations, even when relations are not always cordial.

In a paper published last month for the Carne­gie Endowment for International Peace, Singla argues in favour of a more “interconnected, secure, and efficient trading environment” between the two countries. “It could actually drive the region’s overall prosperity,” she said.

For years, Cecile Fruman, director of Regional Integration, South Asia, at the World Bank, has been stressing on the need for regional trade. She notes that while the potential of intraregional trade between South Asian countries is valued at over $67bn, the current value of trade remains a dismal $23bn. Trade costs within South Asia are 20pc higher than in Asean. “For example, it is 15 to 20pc cheaper for a company in India to trade with Brazil than with one in a South Asian country,” she points out. Citing a 2021 World Bank report, Fruman says that full transport integration between Bangladesh and India could boost national income by 17pc in Bangladesh and 8pc in India. While trade between Bangladesh, Bhutan, India and Nepal grew six-fold from 2005 to 2019, significant untapped potential remains, with growth estimates of 93pc for Bangladesh, 50pc for India, and 76pc for Nepal, she said.

But for trade to flourish between India and Pakistan, it is imperative to “rebuild trust between the two and shield bilateral trade from political fluctuations”, says Singla.

One possibility, she suggests, whereby trade could restart is if both countries recommit to the South Asian Free Trade Area, a 2004 agreement that created a free-trade area for the region. Dr Huma Baqai, rector of the Millennium Institute of Technology and Entrepreneurship, Karachi, finds Safta, and even MFN to have had an insignificant effect on Pakistan’s bilateral trade with India. Like Singla, she points to the elephant in the room — “political will” — and says both countries need well-defined and enforceable institutional frameworks as currently implementation and enforcement are zero. “And it’s not just India, Pakistan is also a high tariff country.”

Singla suggests that if trade resumes, this time round it should be made more collaborative and transparent, and supported by a joint trade portal for technical exchange and product-specific coll­­aborations between business groups and chambers.

“For example, surgical instrument manufacturers in Sialkot could connect with their counterparts in Jalandhar, share technical expertise, explore new markets, and strengthen industry-level people-to-people ties,” she suggests. At the LoC, she said, a stricter and more advanced regulatory regime could be put in place, including truck scanners, X-ray machines, CCTVs and digitisation of records.

Across South Asia, there are examples of collaborations, even when relations are not always cordial. The recent successful trilateral power transaction of 40 MW in 2024, from Nepal to Bangladesh from June 15 to Nov 15, through the Indian grid, was a success in energy trade. In fact, interim Bangladeshi leader Mohammad Yunus has even suggested the creation of a South Asian grid with hydroelectricity from Nepal and Bhutan to cut reliance on fossil fuels.

“China and India, despite their disputes, are engaged in a robust trading partnership of over $100bn worth of exchange of goods and services,” points out former State Bank governor, Dr Ishrat Husain.

While Pakistan is the least economically integrated country in South Asia, due in large measure to its tense relationship with India, there have been small but promising steps it has taken recently. The restoration of trade with Bangladesh after 15 years, signals progress. Following the thaw between the two countries after the ouster of Sheikh Hasina, it surpassed $1bn.

It’s time for India and Pakistan to set aside their pride. The advice from Bangladesh’s Yunus to foster better Bangladesh-Pakistan relations by “settling matters” and “moving forward” can similarly be applied to ease tensions and build a path towards reconciliation between India and Pakistan.

The writer is a Karachi-based independent journalist.

Published in Dawn, March 12th, 2025