India-Pakistan trade

As Pakistan struggles to cope with a dire economic crisis, several Pakistani commentators, including formal policymakers, as well as large sections of the country’s business community have underscored the need for long-term solutions to put the country’s economy back on the rails. Apart from revamping domestic economic policies, several Pakistani commentators have been recommending the resumption of bilateral trade with India. Former Federal Board of Revenue (FBR) (Pakistan) Chairman Shabbar Zaidi in tweets said: “Open trade with India. Start work on the Turkmenistan-Afghan-Pakistan-India gas pipeline.”

If bilateral trade between India and Pakistan, were to resume through the Attari (India) – Wagah (Pakistan) land crossing it could be a win-win situation for both countries (in 2019, Pakistan had suspended trade relations with India after the revocation of Article 370 in Jammu and Kashmir by India). The Pakistani consumer would benefit by paying significantly lesser prices for essential commodities – especially agricultural commodities. In recent months, prices of wheat flour have gone up significantly in Pakistan due to a deficiency of wheat as a result of multiple factors, including the Russia-Ukraine war and the floods in Pakistan in 2022. North Indian farmers – especially from Punjab can sell their agricultural produce, particularly wheat, at a higher price in the Pakistani market.

Growing clamour for revival of bilateral trade in Panjab (India)

It would be important to point out, that there has been a growing clamour in Panjab (India) for resumption of bilateral trade between both countries via the Attari- Wagah land crossing, from various quarters – including  the political class,  farmer groups and the business community of the state.

In December 2022, Pakistani entrepreneurs attended the Punjab International Trade Expo PITEX (held at Amritsar, Panjab, India) – organized by the PHD Chamber of Commerce and Industry (PHDCCI) in collaboration with the Panjab Government (India) — and pitched for re-opening of bilateral trade via the Attari-Wagah land crossing. They argued that the Attari-Wagah is the most convenient route for India-Pakistan trade. It is for the first time since 2017, that Pakistani entrepreneurs attended the PITEX.

While  India said that it was willing to provide financial aid and humanitarian assistance to Pakistan, as flood relief, New Delhi categorically stated that resumption of trade with Pakistan was not on the cards. According to estimates, bilateral trade between India and Pakistan for the period from April-December 2022 was estimated at $1.35 billion. It would be pertinent to point out, that trade between Pakistan and India has also been carrying on via third countries especially UAE.

It has been argued by some commentators that some sort of thaw between both countries may be on the cards specifically after Pakistan PM Shehbaz Sharif’s remarks, last month, that his country desires better ties with India (though his offer for revival of talks with India was conditional), and India’s invitation to Pakistan Foreign Minister, Bilawal Bhutto Zardari to attend the Shanghai Cooperation Organization (SCO) summit to be held in May 2023 in India. Two Gulf states – United Arab Emirates and Saudi Arabia have also been nudging both countries to improve tensions. It remains to be seen if some of these steps lead to any major breakthroughs between both countries.

While resumption of bilateral trade between both countries may seem like wishful thinking – as of now – it could be an important step towards reducing tensions between both countries.

Tridivesh Singh Maini
Tridivesh Singh Maini
Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India