Indo-Pak Economic Relations: Importance
Indo-Pak Economic Relations: ImportanceQuestion: India and Pakistan are the two largest South Asian economies. Discuss the importance of Indo-Pak economic and trade relations in this context.
- India and Pakistan are the two biggest economies in South Asia accounting for 90% of the GDP and 85% of the population of the region
- Indo-Pak economic and trade relations have been restricted so far, with neither of the two countries targeting each other as top trading partners
- Low level of bilateral trade can be associated with the border disputes and tensions
- Both nations share the 11th lengthiest international border in the world, bilateral trade between India and Pakistan remain low(USD 2.6 billion in 2013)
- Longest international border of 8893 km is shared by US and Canada and trade between the two equals USD 632 billion
- Two way merchandise trade between India and Pakistan has been an increase from USD 250 million in 2000-2001 to USD 2666.13 million in 2010-2011
Main items of export from India to Pakistan include the following :
- Organic chemicals,
- Food products including prepared animal fodder,
- Plastic articles,
- Man-made filament,
- Tea and spices,
- Oil seeds.
- Main items of import include copper and copper articles, fruits and nuts, cotton, salt, sulphur and earths and stones, organic chemicals, mineral fuels, rubber, plastic products, wool etc.
- Cooperation and increased bilateral trade would yield mutual benefits for both countries
- Political understanding and removal of trade barriers create tremendous potential for trade and economic progress, if impacted
- Reforms led economic liberalisation notwithstanding, India and Pakistan use tariff and non tariff barriers to protect domestic producers
- Other barriers are lack of infrastructure and poor trade logistics
How to Improve Bilateral Trade?
- Easing travel visa restrictions should be the first step
- There should also be a regulatory framework for facilitating investments across both nations
- If both countries open more points of trade through the land route, there will be greater benefits
- From geo-strategic as well as political viewpoint, both nations need to have close and cordial relations
Facts and Stats
- Share of top 5 export items from India to Pakistan accounted for 70% of the total exports
- Share of top 5 imports from Pakistan to India accounted for 65% of the total exports
- India’s share pf Pakistan’s total export has been lower than 1% during the past one decade since the turn of the 21st century
- Pakistan’s share of total Indian export has remained the same except during 2006-2007 and 2007-2008 when it was little over 1%