Despite mounting tensions in Kashmir and along parts of the border during the last several months, the trade between Pakistan and India has remained intact since the beginning of the current fiscal year.
Pakistan’s central bank revealed that Islamabad expanded its exports to India during the first eight months of 2016-17 while curtailing imports by 23 per cent.
The two nuclear-armed neighbors are the largest South Asian economies but they have been locked in a bitter political and diplomatic rivalry, particular since last summer’s uprising in disputed Jammu and Kashmir territory.
A growth of 14 pc indicates that Pakistan’s exports to India amounted to $286 million in July-Feb. Imports from India fell 23 pc to $ 958.3 m from $1,244 m recorded a year ago.
A key factor in Pakistan’s boosting exports to India is high cement demand in the neighboring country. Interesting the upward trend in exports has offset the negative impact of a decline in Pakistan’s cement exports to Afghanistan – another neighboring country embroiled in regional tensions – and distant South Africa.
According to the State Bank of Pakistan’s cement exports continued their downward trend, with the largest share in the year-on-year decline in the first half of 2016-17 originating from two markets — South Africa and Afghanistan.
“A slight consolation was continued strong demand for Pakistani cement from India. This partially offset the declines witnessed in the two other major markets,” said the SBP report.
In the past five years, the balance of trade has been in favor of India. New Delhi, run by the ultranationalist BJP, often invokes Pakistan bogey to drum up political support. Constituencies in both countries oppose advancing trade ties, and recent tensions have further exacerbated the South Asian trade prospects. On the other hand, China Pakistan Economic Corridor has opened up new avenues and markets for Pakistani exporters.
During the first eight months of the current fiscal year, Pakistan recorded a trade deficit of $ 672 m with India. The deficit was $ 993 m in the same period of the last fiscal year.
The SBP data reveals that imports from India in 2015-16 were worth over four times the exports from Pakistan. In fact, imports from India were at a five-year high. Pakistan imported goods worth $1.8 billion in 2015-16 compared to the exports of just $400m.
But overall, trade in the SAARC region remains much below the potential despite the fact that India has emerged as one of the largest world economies and Pakistan is on way to emerging as a spectacular economic success story.
