A recent statement issued by the Pakistan Foreign Office underscored the fact that Pakistan is unlikely to resume bilateral trade with India. Said Pakistan’s Foreign Office Spokesperson Mumtaz Zahra Baloch on August 16, 2024: “The situation remains intact, and at this point there are no bilateral talks between the two countries with respect to bilateral trade between Pakistan and India.”
Ever since the suspension of trade by Islamabad between the Wagah (Pakistan) -Attari (India) land crossing in August 2019 (after New Delhi revoked article 370 in Jammu and Kashmir) there have been repeated calls for the resumption of bilateral trade via Wagah-Attari by several members of the business community in Pakistan, and on the Indian side in the state of Punjab from several quarters – political class, business lobbies and the farming community.
The economy of Panjab (India) – especially the tertiary sector of the border belt of the state has got severely impacted, by disruption of trade, as has emerged from research. It would be pertinent to point out, that bilateral trade between both countries, via the Wagah-Attari land-crossing, was below the overall potential (bilateral trade via this trade route ranged from $2 billion – $3 billion. A 2018 world bank report titled ‘Glass Half Full: Promise of Regional Trade in South Asia’ estimated at this $ 37 billion).
Important developments in 2019 and impact on Punjab’s border belt
While bilateral trade between India and Pakistan, via the land-crossing had been impacted after the imposition of 200% tariffs on Pakistani goods by India – in the aftermath of the Pulwama terror attack in February 2019 — trade ties were snapped altogether by Pakistan in August 2019, as has been mentioned earlier. This decision was a body blow for the border belt of Punjab (India) as stated earlier – especially the tertiary sector (according to a report published in 2020, an estimated 9,000 families have been impacted by the disruption of trade ). This issue was highlighted during the Lok Sabha election campaign and Members of Parliament (MP) from Panjab — belonging to the Shiromani Akali Dal (SAD), Aam Aadmi Party (AAP) and Indian National Congress (INC) raised the demand for resumption of India-Pakistan bilateral trade via the Wagah-Attari land crossing.
Efforts at resumption of trade
In 2021, then Pakistan Prime Minister Imran Khan had given a go-ahead for the resumption of trade, in essential commodities (sugar and cotton) but after opposition from members of his own cabinet the decision was reversed. There were two other opportunities for resumption of trade; first the Russia-Ukraine war. Pakistan which was earlier importing wheat from Ukraine, began to purchase the same from Russia at a much higher price. Pakistan’s wheat imports from Russia in 2023, were an estimated 1.6 million tonnes, and estimated at $568.3 million. Islamabad could have imported the same at a far lower cost from India, had relations been less strained. In August 2022, after Pakistan experienced unprecedented floods and its economy took a serious hit, New Delhi made it clear that it was willing to provide humanitarian assistance to Pakistan, but normalisation of trade was not in the offing.
The current Pakistan Muslim League-Nawaz (PML-N) dispensation, in Islamabad, led by Shehbaz Sharif (who is serving as PM for the second time since March 2024), has also given several signals, that it is thinking about resumption of trade (several members of Pakistan’s business community have been pushing for the same, arguing that indirect trade via UAE and Singapore is very expensive and a logistical night mare) but the statement by Pakistan’s Foreign office of now it seems highly unlikely that Islamabad will actually go ahead with re-opening. Traditionally, the PML-N has been in favour of trade with India, with Nawaz Sharif — former Pakistan PM and current President of the party — being a strong votary of robust economic ties with India, but the current dispensation lacks the political capital to resume ties as of now and would not like to ruffle too many feathers.
Senior officials of the Modi government, including External Affairs Minister, S Jaishankar have repeatedly asserted that trade and terror cannot go together, though in February 2024, while speaking in parliament India’s then Union Minister of State for Commerce and Industry Anupriya Patel highlighted the point that Islamabad had suspended trade links with India.
A few points need to be borne in mind.
First, while there is a political dimension to the disruption of trade, there is a strong economic dimension. Trade between both countries is happening via Dubai and Singapore, and this is benefitting certain lobbies. Also, while logically trade via the Wagah-Attari land-crossing would be beneficial for Pakistan –since consumers can buy commodities at cheaper prices — there are lobbies in Pakistan which are vary of opening-up – due to significant non-tariff barriers on Pakistani goods. It is important to not view the lack of trade via Wagah-Attari from a singular lens of either geopolitics, or domestic politics or economics. All dimensions need to be examined.
Second, while resumption of bilateral trade is important for the state of Punjab (India) in general and the border belt in particular, politicians and even scholars often hyphenate resumption of trade with access to Central Asia. This is a separate issue for which a separate agreement is needed. Currently, goods from Afghanistan can enter India via Wagah, but not vice-versa. In 2016, Afghanistan had raised the issue of trade with India, via Wagah, but Islamabad had refused. It would be pertinent to point out, that India has sent a relief consignment of wheat to Afghanistan via Wagah in 2022.
Third, it has been argued that given all the constraints, the resumption of trade via Wagah-Attari should happen in an incremental manner in specific areas with a focus on specific sectors which are win-win for both sides.
In conclusion, the resumption of bilateral trade will not just benefit Panjab (India), but the whole of North India, and the Pakistani consumer, it is important to move beyond the rhetoric and blame game and find imaginative ways through which trade via the Wagah-Attari land crossing can be resumed.
The views and opinions expressed in this article are those of the author.
Tridivesh Singh Maini is a New Delhi based analyst interested in Punjab-Punjab linkages as well as Partition Studies. Maini co-authored ‘Humanity Amidst Insanity: Hope During and After the Indo-Pak Partition’ (New Delhi: UBSPD, 2008) with Tahir Malik and Ali Farooq Malik. He can be reached at [email protected].
