PAKISTAN AND INDIA TRADE RELATION AND ITS IMPACT ON REGIONAL ECONOMY

Introduction:
Pakistan and India are the two major countries of Asia, which have strong political, trade and economic
relationship. Pakistan and India are the affiliate of South Asian Association for Regional Corporation (SAARC),
the most important goal of SAARC is to encourage economic and regional integration of the member state.
Before 2004, there was a low rate of trade between Pakistan and India, although, India had awarded Pakistan
the most-favored nation(MFN) status in 1996, the export from Pakistan to India was almost worthless for the
couple of years. In 2003 Pakistans export to India were $82million, and then it was at their peak in 2013 which
was almost $403million. In 2015 Pakistan, had decreased export to India around $312million. On the other
hand, import has quickly increased as trade affairs moved towards normalization. In 2003 import from India
increased to $2.18billion and then in 2015 it was $1.96billion.
Formal trade:
To be update, the phase of official trade between Pakistan and India remain worthless as compared to their
global trade volume and not a single country falls in the category of top ten trading partner of each other. There
had some agreements among academic economists in both the countries that the normalization of trade
relations would bring significant economic benefits equally. The reason behind this situation is the history of
being closed economies, but most important is the political frictions have influenced their mutual trade
relations.
The share of Indias in foreign trade in its GDP has increasingly steadily since the 1990s, but has remained low at
31% until 2003, whereas Pakistans trade directness stood at 38% in 2003.
As bilateral trade, pakistans total goods trade with india (import plus export) contributed a 3% of the overall
trade during the last 5 years. The share of india in pakistans total export is less than 1%, whereas in total import
it is fluctuating within 1.24% to 2.66%. the share of Pakistan in indias export is 0.45%
The commodity-wise composition of Pakistans trade with India during the last five years indicated that on
average 90% of Pakistan export to india in under the six broad categories, which is: edible fruits, nuts,
vegetables roots/tubers.
There is a recent research which shows that Pakistan grew its export to india during first eight months of 2016-
17 while curtailing import by 23%.
The measure categories of export to india is:

S.no Imported from Pakistan to India Us million $ in 2016

1 Petroleum oil and oil obtain from bituminous minerals 98.16
2 Cotton, not carded or combed 11.68
3 Oil seeds and oleaginous fruits 0.27
4 dates, figs, pineapples, avocados, guavas, mangoes, and mangosteens, fresh and dries 10.24
5 Wool 4.72
 6 Woven fabric of cotton 5.20
7 Leather further prepared after tanning or crusting 8.67
8 Portland cement 24.05
9 Instruments and appliance used in medical 4.03

Above 80% of goods traded are raw material or intermediate goods. Both countries import and export in low
consumer goods, which will required further procedure to complete it and then being able to sell it.
There are some measure categories of India export to Pakistan:

S.no India export to Pakistan Us million $ 2016

1 Woven fabrics of synthetic filament yarn 57.90
2 Cotton, not carded or combed 176.33
3 Cotton yarn other than swing thread 94.78
4 Dried leguminous vegetables 33.39
5 Synthetic organic coloring matter 26.66
6 Coconuts, brazil nuts, cashew nuts 5.33
7 medicament 30.29

Trade barriers:
As there are mentioned some barriers from all over the world, so here Pakistan implement tariff barriers for
import from India. The world integrated trade solution (WITS) suggest to reduced import-weighted average
tariff rates for the imports Indian products. During last five years, import of Indian products have increased
rapidly which currently consists of 1946 items. on the other side Pakistan exports are sluggish because india set
non-tariff barriers, such as
1) Unavailability of land trade facilitation:
a) Lack of infrastructure like, rail wagon, sheds, X-ray machine
b) Restraint on cargo system through Sindh route which take almost 10 days for loaded and unloaded
equipment.
c) Limited no of warehouses and cold storage facility either side of boarder
2) Technical barriers:
a) Strict Indian certification requirements by the bureau of Indian standards especially fortextile vegetables and
cement.
b) Different rules and regulations
c) Licensed issued only for 1 year
3) Non-clear and weighty administrative procedure and government policies

Impacts of Pak-India trade relations on regional economy

One of the great economic development in South Asia was the revival of trade talk among pakistan and India in
2011. Economic theory and evidence from all around the world have predict that trade between both countries
economies in South Asia would be far greater than its current level of around $2.5 billion. While both countries
are fully aware of the qualities of trade. Pakistan should have to expand and grow its export markets to tap the
possible of industrial hubs in the south and west (Baluchistan coastline and Karachi in Sindh), in the central belt
(Multan, Lahore, Gujrat, Gujranwala, and Sialkot in Punjab), and in the north (Peshawar in Khyber
Pakhtunkhwa). Trade with India is the greates opportunity which can be an important factor in realizing this
goal. For India, trade with Pakistan not only the advantegous in itself, but can facilitate trade with Afghanistan,
China, Iran, and the Central Asian countries. For both countries, increased trade with each other can create win-
win situation.
Both countries follow the bilateral economic relations have been negatively affected by political factors. With a
peacefull vision and and prosperity to flourish in the region both countries tring to closer economic relation
realising the synergy of bilertral possible.

Reseach shows that more trade faciliation will provide gain for both countries and also for south asian
countries. Increasing in trade and exchange of goods will increase FDI flows to transboundry gas pipeline. In
the pre-colonial time, several significant trade routes ran through current Pakistanextending from Iran,
Central Asia, and Afghanistan in the west to India in the east. These routes were later severed by the
imposition of royally-era borders and poor relations with India.

The trade between two countries has influenced to create peace in south Asia. Some of the research prove that
japan is at a unique state to help, because of its dominance in auto sector in India and Pakistan. Honda, suzuki,
and toyota are presented in both of the countries, japan can pressurize pakistan to do to import from india and
to source parts from neighbour countrys companies in pakistan. Pakistan can import suzuki CKDs from India, on
the other hand pakistan can export Corolla to india. In this way, japan can played as k middle trade source and
help to create better relation in auto sector.

Pakistan and Indias trade also improve the conomy of japan.

Trade between Pakistan and India helps to have effective economic stability amoung all over the SAARC, china
supports Pakistan kashmir dispute and CPEC is also effected by it which is recent economic activity of Pakistan
and china. If india reduced tariff then india can also improve their economy by involed in CPEC.

Turkmenistan-Afghanistan-Pakistan-India Pipeline agreement influenced by the pak-india trade, this agreement

have a great impact on four countries economy. Pakistan and India, according to a beginning breakdown, both
get about 42% of the 33 billion cubic meters per year of gas, and Afghanistan the remainder. Pakistan and India
will receive 1,325 million cubic feet per day of gas, and Afghanistan will receive 500 million cubic feet per day of
gas.

For Afghanistan TAPI project, generate more revenue for development and gas for industrial sector. For this
project, India will get benefit from this project and have economic growth, which cannot be possible with
energy supply in future.

Conclusion:
It is clear that Pakistans economic development depend on normalizing relation with India to cover a South
Asian regional economy. The volume of trade between both countries is very low around 2 to 3 % and there
should be concentrating to reduce tariffs. Pak-India shares a history, culture and boarder. Yet, trade between
the two largest economies in South Asia remains weak. Both countries have influenced on economic growth of
other countries like, Afghanistan, China, and Bangladesh.