Democratic Peace Theory and Challenges to Pakistan India Trade

Democratic Peace Theory circulates around the nature of democratic nations with a view of them being more peaceful than non-democratic states. This assurance to peace is pivoted on creating trade interdependence of the nations on each other[1]. This interdependence will provide the nations with common trade grounds and interests hence ensuring a peaceful environment by avoiding the war. The nations of the world are embodiment of this theory and most important of all is European Union. Europe had been central to wars in 20th century but now the same Europe shares complex interdependence where peace and prosperity prevails. However, the case of Pakistan and India has been different. The old arch rivals do have commonalities when it comes to culture and language at most instances but despite of such linkages both the nations have nonetheless never enjoyed peaceful co-existence. One may say that applying of Democratic Peace Theory in case of these arch rivals can help ensure peaceful environment but the case is not so smooth. The hindrance and challenges to trade are massive in case of Pakistan and India. The trade potential of Pakistan and India according to Chamber of Commerce declined from 149.9 Million USD in 2017 to 0.241 Million USD in 2021. In the current capitalist world where the trade potential of nations is ranging to hundreds of million dollars, a minute sum of Pakistan and India’s trade depicts deep enmity rooted in both the nations. The major hindrance to trade is mostly due conflict of interests of both the nations at regional and global level.

Trade Proxy War and Bloc Formation in Asia

Despite adopting of the institutional liberalism in form SAARC in the region the nations seem to be divided. The major failure of SAARC is due to presence of hostile nations in form of Pakistan and India[2]. Similarly, the interests of these nations in case of Afghanistan also vary. To Pakistan the stability of Afghanistan is synonymous to its own stability but for India, the Afghan land has been a tool to contain Pakistan. Similarly, with the presence of Economic giant China, the trade goals of South Asian nations are centered upon improving their trade relations with China. China has maturely developed its influence in South China Sea effectively ending it dependence on Malaccan Strait. This tactical move has enabled China’s advance towards North Pacific region and their march towards west[3]. With China being so vast market and producer for South Asian economies, the nations have developed a great dependence on China hence missing out on other alternative markets in the region. India despite of having border issues with China at ‘Line of Actual Control’ has impressively continued its trade relations with the giant. Pakistan is an important stakeholder of CPEC and major development in energy and infrastructure can be credited to China. Similarly, the influence India has made in the region is also quite substantial. India has been seen as major partner of Nepal, Bhutan and Myanmar. The Indian diaspora’s in these nations have effectively improved the bilateral ties and have enabled India’s foreign policy effective execution[4]. Pakistan has been an important trade partner of Afghanistan post US withdrawal as well. Afghan economy contains major market place for Pakistani products. In such vast bloc politics in the region no adequate attention has been paid by the region to emphasize on Indo-Pak trade to reduce the hostility and improve the working environment. Trade has also been used as major tool to gain what cannot be achieved through direct confrontation. India has been trying to deny Pakistan markets within the South Asian economies effectively using its influence and Diasporas. Bangladesh has gained effective support of India when it comes to textile industry which shifted from Pakistan to Bangladesh due to power crisis. Hence, South Asia can be regarded as region with its connectivity effectively disconnected.

Trade priorities of Pakistan and India

India has developed itself as an economy having high potential to jump into Global North. However, Pakistan a struggling economy has huge potential depth but lacks exploitation. India’s trade priorities lie in its Silicon Valley, Petroleum needs and Arms Race. India has its oil and petroleum markets in US; India itself is producer of cars and auto-mechanic but enjoys good trade of these products with Malaysia, Thailand and China. India has its defense ties with US while enjoys Major IT trade with China. Pakistan has been offered by US as its major market. Pakistan’s important exports are towards US comprising of agrarian products. The overall imports however are massive ranging from IT products to cars and domestic products. Pakistan can offer India with its agricultural products but India itself has been sufficient in its agrarian needs. Pakistan has seen a major imbalance when it imported agriculture products such as tomatoes, onion and potatoes from India[5]. India has developed itself as balanced Agricultural and Industrial economy but lacks raw material for its industries. Pakistan despite of having enough agrarian depth has been importing materials from the world. Both the nations have by default developed their trade partners in other nations despite having depth between them.

Market depth

Pakistan’s exports to India mainly comprise of raw materials rather than finished products. These raw materials include dry fruits, edible fruits, textile and cotton. Some items have also been exported occasionally to India which includes sugar, cereals, animal hairs and precious stones.  The import from India mainly includes raw materials such as organic materials, residue from food industries, steel, rubber, tanning articles and dyeing materials[6]. There also has been informal trade due to trade restriction. These trade restrictions are due to ban on imports on health articles, high tariff and religious beliefs. The smugglers carry out trade via informal means at border and passenger baggage schemes. This trade also happens through Afghanistan’s channel. The estimate of this unofficial trade lies somewhere around $4.71 Billion[7]. The highest informal trade is of Jewelry and diamonds from India to Pakistan. It accounts for 23% of total informal trade. The informal trade shows the depth of market both economies could provide to each other; it could be substantial in number of ways including the decrease of tariff charges and reduction of distance via direct linkages. This corridor is central to create interdependence between both the nations to get rid of ever increasing standoff between Pakistan and India.


DPT as a failed alternative in Indo-Pak case

DPT has been applied all over the world with consistent results proved over the years. The war drown Europe emerged as peaceful region after successful European integration via EU. Once bitter enemies, now trading partners France and Germany have changed the course of world history with their peaceful co-existence despite being at opposite poles in the two world wars. However, in case of Pakistan and India it seems too complex. The major bone of contention is not only Kashmir but the identity crisis that has been effectively sowed at grass root level. The seeds of enmity sown by the political and military elites have directly affected the trade cause of Indo-Pak. The installation of BJPs government in New Delhi has further radicalized the population where acceptance of trade with Pakistan seems very utopian. The Hindutva cause has been a major resistance to Indian government call for trade liberalism[8]. The nationalist causes in India including Akhand Bharat are major hurdles with their regional hegemonic goals. The experiments of societal and trade integration have failed miserably, May it be Kargil Crisis or Samjhuta Express incident. The radical groups in India such as Arya Samaj and RSS have been very critical towards any sort of relations between both the countries. Despite of cultural and diversity similarity of Indo-Pak, the nations have been divided to core level when it comes to acceptance of each other. Despite of certain good will gestures by Pakistan in form of Aman ki Asha and Kartarpur Corridor the resistance within Indian politics have been massive. The Congress reign in India has seen some sort of betterment in the ties especially during Manmohan Singh’s tenure but congress replacement in the office by BJP has hampered any attempts towards further betterment in the economic ties of Indo-Pak.



Despite of all the differences both nations need to opt of institutional approach to sort out the issues. The improvement in economic ties will have trickledown effect over other sectors as well. The world has been the embodiment of such set ups where capitalist system has trickled down over the communist economies and hence resulting in betterment of ties.  SAARC could prove as very productive forum for dialogue where all the issues could be brought and settled on table. The world should opt for an arbitrator role to decrease the hostility and improve the Indo-Pak ties.

[1] Kevin Placek, “The Democratic Peace Theory,” E, March 29, 2021,

[2] Jawad Falak, “Implacable Failures of the SAARC,” Centre for Strategic and Contemporary Research, June 21, 2017,

[3] Michael Clarke, “Beijing’s ‘March West’: One Belt, One Road and China’s Quest for Great Power Status,” Bringing Central Asia to World, November 3, 2016,

[4] J C Sharma, “India’s Foreign Policy, National Security & Development,” Ministry of External Affairs, December 3, 2013,,for%20India’s%20soft%20power%20diplomacy.

[5] “Pakistan Not to Import Indian Tomatoes Though Prices Soar,” The Hindu, September 26, 2017,

[6] Salman Ahmed, “TRADE INTEGRATION BETWEEN PAKISTAN AND INDIA,” State Bank of Pakistan, n.d.,

[7] Nisha Taneja and Samridhi Bimal, “India’s Informal Trade with Pakistan,” Think Asia, July 2016,

[8] “RSS Opposes FDI in Retail,” The Indian Express, October 1, 2012,

Ali Haroon
Ali Haroon
I am Ali Bin Haroon, an undergraduate student from National Defense University Islamabad. I am currently enrolled in the 5th semester of BS International Relations.