Security Issues And Trade Relations Between

Pakistan And India

Under The Supervision of

Dr. Iram Khalid

Submitted by

Anam Khalid

M Phil International Relations

Department of Political Science, University of the Punjab, Lahore

Abstract

Pakistan and India has been complex relations due to historical and political

events since independence 1947. They fought three wars, have issues on boarder,

water dispute, conflict over Siachen, and Sir Creek a planned by India to attack on

Kahuta respectively. But the bone of contention between these loving angry couple

is Kashmir issue. Founding father of Pakistan believed trade is the way to peace

and harmony between two separated countries of sub-continent. major imprt and

export between two countries which can improve their relations in trade. when the

political relation of both country go on a smooth track the other relations in term of

social ,moral, and specifically economic ties would automatically remain develop,

and when there would be any break through and issues raise again, than the other

kind of relation must went down. Political momentum definitely will play a

significant role for Pakistan‟s trade position.

Key words: Security threats, Trade, MFN, Media, Government.

Security issues and trade relation between Pakistan and India

Pakistan and India has been complex relations due to historical and political

events since independence 1947. They fought three wars, has issues on boarder,

water dispute, conflict over Siachin, and Sir Creek, a planned by India to attack on

Kahuta respectively. But the bone of contention between these loving angry couple

is Kashmir issue.

Pakistan shares its longest boarder with India and has longest security threats as

well. India has large economically; military power and always enjoy rival hostility

with Pakistan and that situation threatened position of Pakistan. But what say that

“the secret of happiness is this: let your interest be as wide as possible, and let your

reaction to the things and persons that interest you be as far as possible friendly

rather than hostile”.

Number of talks, agreements, and dialogue conducted to normalize the relations

but the result did not resolve the issues between them. But now we can see the

policy of „‟peaceful co-existence‟‟ in term of trade. Both countries are trying to

normalize ties because both states need a peaceful environment for economic

development. And this is main base of my research to find out area of engagement

between friends less more enemy neighbors in trade relations.

Research Question:

1: what are the crisis between Pakistan and India?

2: Define trade relations between India and Pakistan?

3: is there are any risk on bilateral trade relations between them?

Basic Objective

To find out the main issues between both state and give historical

perspective of trade relation with current volume of import and export and also

look a side of hindrance on trade opportunity.

Litterateur Review

Pakistan‟s Foreign Policy 1947-2009 by Abdul Sattar is really concise

history on foreign policy of Pakistan with major powers and neighboring states as

well specifically with India. Its founder father repeatedly focused on friendly and

cooperative relations with its neighbors. But soon Pakistan faced a question mark

to its right to peaceful coexistence. Failure of United Nation to resolved the issues,

Pakistan begun look outward world for new friendly and allies relation in order to

provide safeguard to its independence. In this book the author emphasized on the

relations of India and Pakistan in nine chapters he also focused on war and disaster

of 1965.1971, struggle of Kashmir and give a brief chapter on Pakistan-India

disputes and crises.

DIMENSIONS OF PAKISTAN-INDIA RELATIONS by Ijaz Hussain :

This book is a collection of author‟s articles which published in Dawn, The News

and Daily Times on relations of India and Pakistan . it shows deep love of author

towards Kashmir as he mainly focused on issue of Kashmir. In this book he point

out what happened at the Geneva-based UN Commission on Human Right that the

case of Kashmir come as a „‟rude shock‟‟ for nation. Why our foreign policy and

prime minister did give hope to the nation without realizing that they may have to

retreat that would be not much positive? It shows that diplomacy under pressure

bound to b failed. Further author suggest that violation of human rights in Kashmir

is enough to tell international community the limits of Pakistan and Indian bilateral

relations. There is also a chapter on Water Issues and scene of Hijacking of Indian

Airliner in 1984.

Research papers

INDO-PAK TRADE AND ECONOMICS RELATION by Anand

P.Mavalankar is described trade and economic tie with historical perspective. And

gave a brief profile of Pakistan and India trade relation. From scenario of

Pakistan‟s trade the rate of growth is declined and the state of economy of Pakistan

suggest Pakistan to open normal trade to India to earn a sizeable amount by way of

exports and India would gain more in Household goods and engineering and

Pakistan get advantages in cotton, electric power and textile production on the

other hand. Besides opportunity of trade the bilateral relations of trade are also

facing problems too. The writer recommend that political and diplomacy relations

need to be a way of progressive and positive attitude to enjoy a trade link.

Areas of Engagement and Security Threats between India and Pakistan by Mubeen

Adnan also described the security threat to Pakistan by India. Pakistan feel

threatened from India as India is a large, economically stable and militarily strong

neighbor of Pakistan. History shows that relation between India and Pakistan since

their independence remained tense and sometimes remained worst. And the easy

focused on that step which was taken but both countries to normalize their relations

and minimize the issues. Peace is necessary for development and prosperity for

both. She suggest that „‟Expansion of population contacts, trade shows, economic

conferences, parliamentarian dialogues, release of prisoners, most favored nation

status and relaxation in visa policies are good engagements towards normalization

and betterment of relations. These engagements would help both India and

Pakistan to resolve their long standing issues and it will take time‟‟.

Pakistan‟s Trade with India: Thinking Strategically IJAZ NABI : GATT

(Generalized Agreement on Tariffs and Trade, the precursor of WTO), of which

both Pakistan and India were founding members, inserted an India-Pakistan

specific clause in the 38 Articles governing international trade (Article XXIV,

clause 11) „‟taking into account the exceptional circumstances arising out of the

establishment of India and Pakistan as independent states and recognizing the fact

that they have long constituted an economic unit, the contracting parties agree that

the provisions of this Agreement shall not prevent the two countries from entering

into special arrangements with respect to the trade between them, pending the

establishment of their mutual trade relations on a definitive basis‟‟ this shows that

the clause allows Pakistan and India to continue to enjoy a close bilateral trading

relationship. But due to long historical ties on crisis, there would be many other

factors that can be become a break up of smooth trade link its is suggests that

leadership of both countries to take strategically and regionally steps for ongoing

smooth and steady trade relations.

Historical background

The two South Asian nations Pakistan and India have fought three wars

since they got independence in 1947, and remain deeply distrustful of each other.

KASHMIR is the heart of hostility between the neighbors and was the cause of

two of their three wars since independence from Britain in 1947. The third was

over the founding of Bangladesh. And still it is a bone of contention between

Pakistan and India.

WATER The two countries have disturbed relation over use of the water flowing

down rivers that rise in Indian Kashmir and run into the Indus river basin in

Pakistan. The two sides have been trying to find a solution that would allow them

to withdraw troops, but India says it is unwilling to bring its forces down until

Pakistan officially authenticates the positions they hold.

Pakistan has said it is willing to do so but on the condition that it is not a final

endorsement of India's claim over the glacier, one source of meltwater for

Pakistan's rivers.

Pakistan says India is unfairly diverting water with the upstream construction of

barrages and dams. India denies the charge.No immediate progress is expected

here.

Tension raised when India decided to build dam on the Chenab River at Salal in

1970. Another tense situation seen in 1980s when India embarked on the

construction of a barrage on the Jehlum River at Wuller Lake. Another issue arose

when India Decided to build a hydroelectric power project on the Chenab River

with the Dam at Baglihar upstream from the Salal dam. SIACHEN Indian and

Pakistani forces have faced off in mountains above the Siachen glacier in the

Karakoram range, the world's highest battlefield, since 1984.

Sir Creek the demarcation of the line in Sir Creek at the west of Indo- Pak

boundary in the Run of Kutch. India claim that the territory of Sir Creek is the part

of India.

Kashmir Issue

Bbc published a very beautiful report on Kashmir issue with its important key

events since 1947 to 2016. It is very informative report that tell us the struggle of

Kashmir by year.

”A chronology of key events

1947 - End of British rule brought result of partition of sub-continent into Hindu

India and Muslim-majority state of Pakistan.

1947 - The Maharaja of Kashmir signs a treaty of accession with India . War

breaks out between India and Pakistan over the region.

1948 - India raises Kashmir in the UN Security Council, which in Resolution 47

calls for a referendum on the status of the territory. The resolution also calls on

Pakistan to withdraw its troops and India to cut its military presence to a minimum.

A ceasefire comes into force, but Pakistan refuses to evacuate its troops. Kashmir

is for practical purposes partitioned

1951 - Elections in the Indian-administered state of Jammu and Kashmir back

accession to India. India says this makes a referendum unnecessary. The UN and

Pakistan say a referendum needs to take into account the views of voters

throughout the former princely state.

1953 - The pro-Indian authorities dismiss and arrest Prime Minister Sheikh

Abdullah, leader of the governing National Conference, after he takes a pro-

referendum stance and delays formal accession to India. A new Jammu and

Kashmir government ratifies accession to India.

1957 - The constitution of Indian-administrated Jammu and Kashmir defines it as

part of India.

1950s - China gradually occupies eastern Kashmir (Aksai Chin).

Indian war with China

1962 - China defeats India in a short war for control of Aksai Chin.

1963 - Pakistan cedes the Trans-Karakoram Tract of Kashmir to China.

1965 - A brief war between Indian and Pakistan over Kashmir ends in a ceasefire

and a return to the previous positions.

1971-72 - Another Indo-Pakistani war ends in defeat for Pakistan and leads to the

1972 Simla Agreement .This turns the Kashmir ceasefire line into the Line of

Control, pledges both sides to settle their differences through negotiations, and

calls for a final settlement of the Kashmir dispute. The Agreement forms the basis

of Pakistani-Indian relations thereafter.

1974 - The Opposition Plebiscite Front in Indian-administered Jammu and

Kashmir drops demand for a referendum in return for extensive autonomy in an

agreement with the Indian government. Sheikh Abdullah becomes chief minister,

and his political dynasty continues to dominate the National Conference and state

after his death in 1982.

1984 - The Indian Army seizes control of the Siachen Glacier, an area not

demarcated by the Line of Control. Pakistan makes frequent attempts to capture the

area in the following decades.

Start of insurgency

1987 - Disputed state elections in Indian-administrated Jammu and Kashmir give

impetus to a pro-independence insurgency centered around the Jammu and

Kashmir Liberation Front (JKLF). India accuses Pakistan of fomenting the

insurgency by despatching fighters across the Line of Control, which Pakistan

denies.

1990 - The insurgency escalates after the Indian Army kills about 100

demonstrators at Gawakadal Bridge. Attacks and threats lead to the flight of almost

all Hindus from the Kashmir Valley area of the state. India imposes Armed Forces

Special Powers Act (AFSPA) in Jammu and Kashmir. 1990s - The insurgency

continues, with Kashmiri militants training in Pakistan and India deploying

hundreds of thousands of troops in Jammu and Kashmir. Violence against civilians

by both sides is widespread.

1999 - India and Pakistan go to war again after militants cross from Pakistani-

administered Kashmir into the Indian-administered Kargil district. India repulses

the attack, accuses Pakistan of being behind it, and breaks off relations.

2001-2004 - Moves to boost relations between the two countries are punctuated by

continuing violence, notably an attack on the parliament of Indian-administered

Jammu and Kashmir in Srinagar in 2001.

2010 - Major protests erupt in the Kashmir Valley of Indian-administered Jammu

and Kashmir over the summer after a demonstrator is killed by the Indian army.

The protests abate in September after the government announce measures to ease

tension.

2011 August - Chief Minister Omar Abdullah announces an amnesty for the 1,200

young men who threw stones at security forces during the anti-government protests

in the Kashmir Valley the previous year.

Indian State Human Rights Commission confirms presence of more than 2,000

unidentified bodies in unmarked graves near the Line of Control. Activists say

many may be people who disappeared after being arrested by security forces.

2011 September - Indian forces kill three Pakistani soldiers in firing across the

Line of Control. India accuses Pakistan of opening fire first.

2013 September - Prime ministers of India and Pakistan meet and agree to try

reduce the number of violent incidents at their disputed border in Kashmir.

2014 August - India cancels talks with Pakistan after accusing it of interfering in

India's internal affairs. The decision comes after Pakistan's High Commissioner in

Delhi consulted Kashmiri separatist leaders in advance of the talks.

During a visit to the disputed border state of Jammu and Kashmir, India's Prime

Minister Narendra Modi accuses Pakistan of waging a proxy war against India in

Kashmir.

2014 October - Pakistan and India exchange strongly-worded warnings, after a

flare-up of violence across their common border leaves at least 18 people dead.

BJP joins government

2015 March - India's ruling BJP party is sworn into government in Indian-

administered Kashmir for first time in coalition with local People's Democratic

Party, with the latter's Mufti Mohammad Sayeed as chief minister.

2015 September - Muslim separatist leaders in Indian-administered Kashmir close

shops, businesses and government departments in protest at the enforcement of a

colonial-era ban on eating beef.

2015 November - One person dies in violent protests following a visit to Indian-

administered Kashmir by Prime Minister Narendra Modi.‟‟

Sir Creek:

It is very important territory for India due to oil and gas resources. The

demarcation of the line in Sir Creek, at the western terminus of the boundary of

India and Pakistan in the Run Of Kutch and it is unresolved since 1969. The

boundary was demarcated by the tribunal which did not considered necessary to

take up the question regard to the 100 km stretch of sir creek because it is the part

of Pakistan as in 1908 when the clash started between the ruler of Run of Kutch

and Sindh then British Indian Government annexed this territory to Sindh Side.

Pakistan sought negotiation to resolve the issue but India wished an air survey first.

In 1989 surveyors general of both countries met but could not reach on any

agreement. It is will of poor fishermen on both sides to start up the negotiation

because hundreds of fishermen arrested by the coastguard as they did not the law

of demarcation or any other law regarding the boundary line.

Siachen Issue:

Siachen means „the place of wild roses‟ .Siachen glacier is the great

Himalayan watershed that demarcates central Asia from the Indian sub-continent,

and that separates Pakistan from China in this region .It is the world‟s second

longest non-polar glacier, and thus is sometimes referred to as the third pole .It is

70 km long and flows from an altitude of 5750 meters to 3620 meters above sea

level.Siachen is known as the world‟s highest battlefield between India & Pakistan.

Troops are deployed at elevations of up to 6,700 metres (22,000 feet) at minus 60

degrees C. Siachen conflict began in 1984 when both India and Pakistan, began

sending mountaineers, in an attempt to lay their claims over the area. Several

skirmishes took place till 2003 when a cease fire was declared. The roots of the

conflict over Siachen lie in the non-demarcations on the map northward to the

China boundary beyond NJ9842, which is the line‟s “dead end” in the India-

Pakistan line of control agreement. The 1949 Karachi agreement and the 1972

Simla agreement presumed that it was not feasible for human habitation to survive

north of NJ9842. UN officials presumed there would be no dispute between India

and Pakistan over such a cold and barren icy wasteland .The contentious area is

only 900 square miles (2,300 km2) Indians control the heights while the Pakistanis

control the glacial valley. As a result, Pakistanis cannot climb up, and Indians

cannot come down .Together, the two nations have about 150 manned outposts

along the glacier, with some 3,000 troops each .Over 2,000 soldiers have died at

Siachen. More soldiers have died from frost bites, cold and avalanche i.e. harsh

weather rather than combat. The talks for demilitarisation of Siachen did take place

between India and Pakistan in May 2011, but failed to reach any agreement.

The truth remains that this stretch of icy wasteland holds no political or economic

importance to the billion and a half residing on both sides of the border.

Wullar, Salal, Baglihar and Kishenganga Projects:

The Indus Waters Treaty of 1960 allow the run of the river power plants but

restricted the construction of dams on the western rivers it is compulsory for India

that whenever she plan any project to interfere with the flows of river, it is under

the treaty that provide relevant data to Pakistan. In 1970 India decided to construct

a dam on the Chenab River at Salal. After the failure of Indus Commission to settle

the issue, the issue taken up the level of government. And India agreed to reduce

the height of dam.

Another question arose in 1980s on the construction of a barrage on the

Jhelum River at the mouth of Wullar Lake. Pakistan raised the issue in the

commission in 1985 but veined. Pakistan asked India to discontinue construction,

after some delay India suspended construction. It asked India to acknowledge that

the project was inconsistent with treaty and in 1989 India offered change design

and operating procedure. However no agreement was reached despite of meeting

on commission as well governmental level.

Another issue is when India decided to build a hydroelectric power project

on the Chenab River with a dam at Baglihar upstream from the Salal dam. “The

reservoir was far in excess of the prescribed limit and would enable India to

manipulate the flow of the river in a way that would lead to either complete

stoppage for up to twenty eight days during the critical wheat growing period of

December to February, or open the flood gates to inundate the land in Pakistan. At

first India did not provide the requisite data about the project in advance and then

delayed a visit by the Pakistani experts to the site as required under the treaty” in

2001 to 2004 at Indus commission level and in 2005 at governmental level

negotiation took place but not progressed. Then Pakistan decided to refer the

matter to World Bank. As a result the height of dam reduced by 1.5 meters and size

of pondage by 14 %. India planned to build a power project on the Kishenganga

tributary of the Jehlum river. Pakistan protested that diversion of stream would

violate the Indus Water Treaty.

Trade relations

Both country have long confrontation since independence. War of

1948,1965,1971, Kargil issue 1999, dispute on line of control, allegation of spies

from both side are the phases of bad relation between both states .In the context of

trade relation between them. The unified economy of sub continent divided after

independence. Pakistan refused to follow the same pattern of devaluation currency

as India did and this step annoyed India and the trouble in trade got started.

Founding father of Pakistan believed trade is the way of peace and harmony

between two separated country of sub continent. But huge migration from both

side, bloodshed and controversial annexation of Kashmir created deep suspicious

to both neighboring state. The suspended relation of trade in 1949 and 1950 again

started in 1951India was Pakistan‟s largest trading partner, and this continued to be

the case until 1955–56. Another break up in trade was resulted by the war of 1965,

but Tashkent Pact in 1966-67 again clear the way for trade but on limited scale.

War of 1971 disturbed the trade environment once again and Shimla pact 1972

gave another chance to trade relation. 1989 nuclear testing, attack on Indian

parliament in 2001, once again suspended the relation of good neighbor. Year of

2002 marked stable bilateral and trade relation after relaxing on boarder. In

November 2011, the government of Pakistan announced its decision to grant Most

Favored Nation (MFN) status to India. This means that India, in principle, will

enjoy lower tariffs and fewer trade barriers in its economic relationship with

Pakistan. The decision, which followed New Delhi‟s extension of MFN status to

Pakistan in 1996, underscores Islamabad‟s willingness to deepen commercial ties

with its long-time nemesis.

India and Pakistan were dependent on each other at the time of independence. The

General Agreement on Tariffs and Trade (GATT) was negotiated almost at the

time of Partition. The founding members of GATT, keeping in view the fact that

the Subcontinent was more or less a single economy, allowed special dispensation

for the two countries under Article 24 (paragraph 11) of GATT. The accord was

signed by 23 countries, including Pakistan and India, on October 23, 1947. India

ratified GATT on July 8, 1948, and Pakistan followed suit on July 30, 1948.

Between 1948 and 1965, Pakistan and India used a number of land routes for

bilateral trade. These included eight customs stations in Punjab province at Wagah,

Takia Ghawindi, Khem Karan, Ganda Singhwala, Mughalpura Railway Station,

Lahore Railway Station, Haripur Bund on River Chenab, and the Macleod Ganj

Road Railway Station1. Article 24/paragraph 3(a) of GATT, even signed a bilateral

agreement on December 22, 1957, to facilitate border trade. It must be noted that

political leadership did not involve the issues of the time of independence with

trade relation.

1 Moving Toward Pakistan-India Trade Normalization: An Overview ZAFAR MAHMOOD

1948-1949, Indian share in Pakistan‟s import and export was23.6% and 50.6%.

which recorded decline to 1.3 % and 0.6% in 1975-76 2.(table1)

India‟s share in Pakistan‟s global import and export

YEAR IMPORT EXPORT

1948-49 23.65 50.6%

1975-76 1.3% 0.6%

Table1 Source: Trade Map, International Trade Center, Geneva

Pakistan‟s share in India global Import and export was 2.2 and 1.1 respectively in

1951-52 which went down to 0.7 % and 0.13% in 2005-06.

In 2001 India‟s trade with Pakistan in import was 164.4 US million which

increased to 2235.5 $ Million in 2010 with the difference of 2,071.2US $ million.

Trade balance estimated 1183US$ million in 2010. After Parliament attack in India

2001, a declined on export marked by the difference of 36US$ million. But the

trade volume was 153 us$million in 2002. Import in 2010 was 2235.8 US

($million) and export was comparatively low from 2009. Trade volume declined to

1183. US ($million) in 2012 which was 1400. US ($million) in 2009. (table2)

India‟s trade balance with Pakistan US($million)

2 Ghuman, R.S, Indo-Pakistan Trade Relation,New Delhi:Deep And Deep Publication,1986 and Federal Bureau

Islamabad as quoted in Ghuman R.S and D.K Madan(2006)

Year 2001 2002 2003 2004 2005 2006 2008 2009 2010

import 164.6 187.7 183.7 522.1 593.1 1235.0 1772.8 1445.8 2235.8

Export 69.9 33.9 98.1 79.1 165.9 286.1 372.0 272.1 248.4

trade 94.7 153. 115. 442. 427. 948.6 1297. 1400. 1183.

Source: Trade Map, International Trade Center, Geneva (table2)

Improved trade relations were witnessed in March 2011 after revival of Pakistan

India dialogue. One of the reasons could be globalization which promoted regional

co-operation on economic grounds in the region. Bilateral trade was initiated by

business communities at both sides in spite of the existing conflicts (Askari, 2012).

From 2001 to 2010 sugars and sugars confectionery, cotton, manmade fillments,

organic chemicals, residue s,waste of food industry and animal fodder was top

product of export to Pakistan from India (table3)

India‟s top export to Pakistan (US$MILLION)

Product 2001 2010

sugars and sugars

confectionery

61.91 613.33

Cotton 0.66 320.04

manmade fillaments 0.01 300.39

organic chemicals 28.54 252.13

, residues ,waste of food

industry and animal

fodder

7.90 75.52

Source: Trade Map, International Trade Center, Geneva (table3)

Vegetables, chemicals, raw material and textile and clothing remained top product

for import and export between India and Pakistan. They share 18.57 and 21.09

import and export product share in vegetables and 22.84%,19.81% share import

and export in chemical respectively (table4)

Import and export of products between India and Pakistan 2014

Products Import US$

thousands

Import product

share %

Export US$

thousands

Export product

share

Vegetables 390,858,43 18.57 82,701.33 21.09

Food products 219,514,64 10.43 3,175.44 0.81

Minerals 2,570.39 0.12 55,620.70 14.18

Fuels 36,618.54 1.74 7,931.83 2.02

Chemicals 36,618.54 22.84 77,704.58 19.81

Plastic and

rubber

195,887.15 9.31 18,848.73 4.81

Textile and

clothing

483,440.41 22.97 77,704.58 19.81

Metals 56,603.36 2.69 52,302.94 13.34

Raw material 572,683.37 27.1 192,425.24 49

Source: worldbank.org (table4)

Synthetic Filament Yarn Woven Fabric is the 169th most traded product and the

785th most complex product according to the Product Complexity Index (PCI).

The top exporters of Synthetic Filament Yarn Woven Fabric3 are China ($8B),

South Korea ($1.97B), Other Asia ($1.55B), India ($1.1B) and Japan ($1.06B).

The top importers are China ($1.74B), the United Arab Emirates ($1.66B),

Vietnam ($1.1B), the United States ($826M) and Indonesia ($757M). Pakistan

import 26% Synthetic filament yarn woven fabric from India in 2009 and 64% in

3 A yarn composed of continuous filaments assembled with or without twist. filling in a woven fabric, the yarn

running from selvage to selvage at right angles to warp. Each crosswise length is called a pick. In the weaving process, the filling yarn is carried by the shuttle or other type of yarn carrier.

2013 amount of $113m. pakistan 2nd

partners in Synthetic filament yarn woven

fabric is China with sharing of 27%.

What does pakistan import from india

Product 2009 2010 2011 2012 2013

Synthetic

filament yarn

woven fabric

26% 2.7% 3.6% 5.9% 5.6%

Cyclic

hydrocarbons

14% 8.3% 15% 12% 7.3%

Raw cotton 8.8% 17% 16% 10% 15%

Soyabean

meal

5.4% 6.6% 9.7% 14% 13%

Onion 4.2% 0.94% 1.5% 1.6

Raw sugar 19%

Tomatoes 4.2% 6.0% 5.9%

(table5) Source: http://atlas.media.mit.edu

Import in cyclic hydrocarbons was in number two with india in 2013 which was

comparetively low from 2010 to 2012. 145$M import done in 2013 of cyclic

hydrocarbon.here is a review on pakistan‟s import in cyclic hydrocarbon with other

counties. India is in 2nd

number.(table5,6)

Import of pakistan in cylic hudrocarbons from other countries.

Kuwait 39% $240M

India 24% $145M

Oman 13% $81.2M

Saudi Arabia 13% $79.4M

(table6) Source: http://atlas.media.mit.edu

Pakistan‟s import raw cotton with india is about 39% in 2013 with the amount of

$301M. other partner was Afghanistan and US.(table 7)

Pakistan‟s import of RAW COTTON

India 39% $301M

Afghanistan 24% $127M

US 20% $151M

(table 7) Source: http://atlas.media.mit.edu

Pakistan‟s imprt volume in soyabean was $333M in 2013. Pakistan gradually

increased its tarde volume in soyabean from 2009 which was 5.4% and became

80% in 2013 with amount of $269M. (table8). 97% import to Pakistan from India

of tomatoes remained at high level.(table 9). Pakistan have three trade partner in

onion India, China and Afghanistan respevtively. But ranking wise India Import

40% onoin to pakistan (table10)

SOYABEAN

India 80% $269M

Afghanistan 20% $66M

(Table8) Source: http://atlas.media.mit.edu

Tomatoes

India 97% $123M

(table9) Source: http://atlas.media.mit.edu

Onion

India 46% $32.2M

China 34% 23.5M

Afghanistan 20% 13.6M

(table10) Source: http://atlas.media.mit.edu

Now the other look on the side that what did pakistan export to india from 2009 to

2013. In 2009 toatl pakistani export to india was Total: $283M. Tropical Fruits4.

Refined petroleum and cement was top product with the amount of $44.4M,$41.3

and $34M respectively. $343M amount of export to India from Pakistan in 6 fields

of minerals products, tropical fruits, hydrocarbons, non retail pure cotton yarn, raw

lead, and polymers 2010. Once again tropical fruit, cement and refined petroleum

remained on top. 17% export to India from Pakistan recorded in Tropical fruits

estimated amount $58.4M. exported amount to India was $399M, that is divided

in major area of product which is composed of gypsum ,raw sugar, f minerals

products, tropical fruits ,hydrocarbons, non retail pure cotton yarn ,r aw lead ,and

polymers. Topical fruits rose at the percentage of 25% value of $97.7M. (table11)

What does Pakistan Export to India

Products 2009 2010 2011 2012 2013

Tropical Fruit 16% 17% 18% 6.8% 25%

Refined

Petrolium

15% 6.9% 9.3% 5.5% 6.4%

Cement 12% 9.2% 10% 6.5% 6.4%

Poly 7.2% 3.9% 2.4 1.8% 3.7%

4 tropical fruits A variety of fruits, usually of exotic origin, more or less available in the West.

carboxyclic

Acid

Heavy Pure

Woven Cotton

6.0 3.8% 2.2% 1.6% 2.7%

Cyclic

Hydrocarbons

5.3 3.4% 6.6%

Raw Lead 5.8%

Gold 8.6%

Scrap Copper 29%

Raw Cotton 13%

(table11) Source: http://atlas.media.mit.edu

Fruits are valued as protective food. These are rich in minerals, vitamin A, B and

C, and provide more energy per unit weight than the cereals. Pakistan's wide range

of agro-climatic conditions allow production of a variety of tropical and sub-

tropical fruits. Fruits and vegetables consumption is steadily increasing in Pakistan.

As economies develop, consumers need high value and quality products. There,

also, is an emerging demand for organic fruits. Table 12 shows the trade of tropical

fruits with India. 2nd

exporter is Afghanistan but if Pakistan wants it will develop

the area of fruit tropical with India and increase percentage as well.

Pakistan is also a major exporter in tropical fruits and cement to pakistan.

Where does India Import Tropical Fruits from

Pakistan 39% $97.9M

Afghanistan 27% $67.1M

Iraq 20% $50.4M

Source: http://atlas.media.mit.edu (table 12).

Cement

Pakistan 45% $25.3M

Bangladesh 22% $12.5M

China 9.2% $5.19M

Source: http://atlas.media.mit.edu/en/

It is the review of trade between india and pakistan in which different phases and

hurdeleds discussed. A look also upon major imprt and export between two

countries in which they can improve their relations in term of need and demand.

After being progress bilateral relation in trade there are still fears of India‟s

economic dominance in the minds of the Pakistani private sector and political

leaders. India has a huge trade balance in its favor with other SAARC countries,

and a constant fear in the minds of analysts is that owing to a large industrial base

and a restrictive import regime, the trade imbalance between Pakistan and India

will further disturbed. The Pakistani private sector complains of a non-cooperative

attitude of import regulators in India. In the way of normalization process of trade

there are also a need of composite dialogue in other track as well. Pakistan always

courage trade normalization but when it reserves it show serious implication. „‟By

opening wide the doors of our hearts we can broaden our horizon ‟‟ , India is huge

economically state so India should need to strengthen its economic relation with

other small state so that step can also minimize the tensions and problems. India

imposes strict restriction to Pakistan on the other hand Pakistan had little too on

India, this difference need to be solved for betterment in trade. There are lobbies in

Pakistan that believe that due to India‟s large industrial base and economies of

scale, Pakistan‟s market will be swamped with Indian products that damage

Pakistan‟s industry. The impression that trade liberalization with India is creating

unemployment in Pakistan must be avoided at all costs, in order to prevent a

political and social backlash and to make the process sustainable. Other countries

can also help to normalize the trade relation in India and Pakistan that can further

boost the way of peace and stability of South Asia. A mature steps need to be taken

to hamper the concern of private sector in Pakistan regarding trade. There is also a

perception that law and enforcement forces in Pakistan related to security issue do

not wants the good relation of trade between India and Pakistan but this is totally

wrong because if we look at the past it reflects that always political entities created

hurdles in trade rather than security forces. This is further validated by the fact that

Pakistan‟s trade relations with India were on an MFN-basis under military

governments, which were in power starting in 1958. Bilateral trade thrived during

those periods. Despite all this discussion the main point is only political stability.

We see that when the political relation of both country on a smooth track the other

relations in term of social ,moral, and specifically economic ties would

automatically remain develop, and when there would be any break through and

issues raise again than the other kind of relation must went down. Political

momentum definitely will play a significant role for Pakistan‟s trade position.

Major risks

John F Kennedy says that „‟ there are risks and cost to action ,but they are

far less than the long range risks of comfortable inaction‟‟. But there are fear in

India and Pakistan to take any risks regarding trade. The risk major is make trust

upon each other, due to its past painful history. Pakistan and India both were

hostile rivals after and before some time of independence. And the remaining gap

of trust filled by war , and security issues. And that situation of mistrust dominate

the thinking power to both sides. It will take some time to build the process of trust

if it will take seriously by continues manner. Because it‟s a serious concerns in

business community that if there will be a disturbance on political level it may

effect the efforts of investors too. It always be recommended that if there will b

any crisis on policy level it should be solve by engagement rather then withdrawal.

And suspended relation also disturb the seriousness of businessmen.

The role of media is quite powerful that can change the mind of people. It

always happen that media exaggerate the news regarding issues between indo

Pakistan. Media can create such environment that may raise the risk in trade

relation. A negative image of Indian economy may be transmitted to Pakistan for

change the mind in trade or may be through any incident media can cut the way of

trade. Media can use its power in positive side as well. Through talk shows,

seminars, conferences and programs by presenting benefits of normalize relation in

trade it will open new progressive way.

Inefficient manufacturing firms also lobbying that cheap products from other

country will destroy the domestic trade and jobs because trade liberalization may

effect them. On the other side trade liberalization will be the reason of expansion

of business to both side of country. A strong measure need to be taken through

tactics for this lobby.

Another risk which is well known is one and only political role somehow in

negative role more. A serious, committed, and continues set back of composite

dialogue is need of time if it will not proceed forward then whose are not wants to

see normal relation in trade in India Pakistan they would use the government

through emotional frame. But with the passage of time it is now good sign both

country is serious in betterment of normal relation.

Ships are required to touch a third country port (e.g. Dubai or Singapore)

before delivering import goods, except limited ports of call between Karachi and

Nava Sheva (in Gujarat).

„‟ One of the major problems impeding larger India-Pakistan trade flows is the

poor state of logistics. The World Bank Logistics Performance Index that measures

the efficiency of the customs clearance process, quality of trade and transport-

related infrastructure, ease of arranging competitively priced shipments,

competence and quality of logistics services, ability to track and trace

consignments, and frequency with which shipments reach the consignee within the

scheduled or expected time, places both countries quite low. Although the new

integrated border check at Wagah-Attari would allow 10 times more trucks to

cross, other logistics snags have to be dealt with quickly. Special task forces with

adequate powers should be formed for at least the first year to solve the problems

and facilitate flows of goods and people‟‟.

Findings:

After the independence the founder of Pakistan wanted the peace and

harmony between two states and the solution of such issues according him

would be trade.

Being a neighboring state there is a trade potential in India and Pakistan if

the process of others track in form of security issues do not hamper the trade

relation.

India is a huge economic country and Pakistan is also finding new markets

to stabilize its economy. Being a nearer neighbor to India, Pakistan should

need to take advantages besides issues.

The role of politician is quite important in good trade relation because the

policy makers could provide the straight way in trade or they can also

diffuse the ongoing process too.

There is also a need on the side of India to reduce the fear in Pakistan and

behave fairly in spite of context of security threats.

Pakistan and India find out the new paths of investment, import and export

opportunity in which they pay a lot in other far countries may be the relevant

area is next to the door where they get advantage in less amount.

Media, people to people link, civil society will also play a significant role in

good trade relation.

Recommendations

1. Travel (visas, air/road/railway transport) must be facilitated to promote

competitive trade in goods and services that benefits small and medium-

sized firms, to tap into the large pool of Indian skilled workers, gain access

to Indian farm and other technology, and encourage cross-border tourism.

2. India is very stable and progressed in Information Technology but are faced

with increasing labor costs. They can sub-contract some of the work to

Pakistani firms at rates that are relatively cheaper than what they pay in

India and thus maintain their market share. And by this Pakistan can also get

new ideas in IT fields and experts as well.

3. Businessmen have to travel frequently to different places at short notice . No

discrimination between large and small businessmen should be allowed in

granting visas.

4. Whenever a terrorist activity happen it directly effects the on going process

of trade relation. There must be a need to full the vacuum of trust regardless

the worst situation.

Conclusion:

Mutual co-existence and peace is only the solution, not the war and today both

country have come to know that bilateral trade relation can enhance the friendly

relationship between them. There is no guarantee that whether this will be a

smooth process in normal relation or not but it will show a change and we can give

the space to any kind of change it may be, will show the path of right way which

further go the ultimately solutions of our long term hostility.

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