Political legacy and the trade with India
Over the last five years, dynamics of India-China relationship — one an economic tiger and the other the gigantic economic dragon of Asia — at long last has succeeded in shedding the legacy of embittered history of political relations to realise the benefits that could accrue from closer economic interaction.
The private sector, particularly that of India moved fast to pounce on the opportunity that the changing political scenario threw up and trade picture between the two nations changed dramatically.
The volume of formal trade experienced a metamorphosis when its quantum multiplied several folds from a few hundred dollars in 2002 to around $15 billion currently.
The business leaders of India told Dawn that besides amazing growth in Chinese prosperity the major spur in construction activity in Beijing in a run up to the prestigious international sports event opened new vistas of multifarious businesses for Indian industry.
Manish Mohan of the Federation of Indian Chamber of Commerce and Industry was optimistic that the industry in Pakistan would closely work with Indian industry to complement each other, to feed the stimulus that the sport event of 2010 has generated in the economy.
The leaders of Indian industry felt that necessary framework to back the Pakistan-India economic partnership is in place in form of South Asian Free Trade Agreement (SAFTA) which could play its role in cementing the economic relations between the two countries.
The apex trade body representatives mentioned cement in this regard. “As India moves ahead on several mega public works and infrastructure projects, its domestic demand has gone much beyond the current capacity of its cement industry. The quality of Pakistani cement is also of international standard and we are willing to make up for our cement deficit by importing this key ingredient from our neighbour”.
Tariq Saeed, a business leader of Pakistan who heads Safta was highly optimistic about the prospects of economic cooperation among major South Asian nations.
“My interaction with businessmen on both sides of the border and the deliberations at Safta meetings has helped me in changing my position on trade with India. A few years ago I believed that the issue
of Kashmir needs to be settled first, but today I think that the economic relations must not be kept hostage to lingering political disagreements. Let the industry and trade pave the way for moving closer to resolution of contentious issues”.
“The money does not sit pretty in coffers. It tends to flow towards avenues with a promise of good returns. The political goodwill is essential but economic integration could play its role in forcing the political leadership to restrain from blowing up controversial issues out of proportion to gain political mileage”, a business leader of Pakistan commented requesting anonymity.
The quantum of trade between India and Pakistan increased from $251.01 million in 2002-03 to $1672 million in 2006-07. The more interesting feature is the fact that Pakistan exports have swung from measly $44.5 million in 2002-03 to $323.26 million over the same period.
The balance of trade is still loaded in favour of India as Pakistan’s imports from the Asian tiger touched $1349.60 million in 2006-07 from $206.16 in 2002-03.
“The situation is bound to transform as Pakistani manufacturers have developed an interest to look eastward”, said a leading tycoon of India.
“The rural economy of the two countries continue to be dependent on vagaries of nature and therefore farm production is not so predictable.
With dependable transport infrastructure in place between India and Pakistan, they can help each other out in situation of distress- in case of short crops of one another other, and even in perishable items”, a FICCI functionary told Dawn in Delhi making a case for closer economic relations.
“The trade in agriculture has helped the two countries to bridge the short-term supply shortages caused by seasonal crop fluctuations”, said another leader.
India’s export basket for Pakistan featured mainly agri-based products like sugar, vegetables, meat, cotton and petro-chemical products.
Whereas items which have witnessed significant jump in import in India from Pakistan include leather, pearl and semi-precious stones, non-ferrous metals, machinery except electronic and electric. ( The writer is currently on a visit to New Delhi)