Govt must ban sale of smuggled Indian goods

February 19,2019

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LAHORE: Indians are very prompt in taking measures that hurt Pakistan economically.

Pakistani planners however avoid taking any retaliatory steps, or even if they do, it does not hurt India, as our planners target official trade only.

The withdrawal of Pakistan’s MFN status by India will not hurt Pakistan much economically, because exports to India are merely $300 million, while imports from India average above $2 billion. Pakistan exports mostly commodities to India.

Cement was the only finished product on which Indians have slapped 200 percent duty. Pakistan exports thousands of tons of gypsum to India for its cement industry.

As a first step, Pakistan should either ban export of gypsum to India or slap 100 percent duty on its export. This is still a minor measure.

The government of Pakistan will have to take measures to stop sales of smuggled Indian goods as well as import of Indian products through a third country.

Many studies have confirmed that against official Indian exports of $2 billion to Pakistan, goods worth $2 billion are smuggled into our country, while Indian made goods worth $7 billion find way in Pakistani markets through third countries like UAE and Singapore.

This import through a third country can be stopped easily through vigilant customs. These goods made in India enter Pakistan as goods made by a third country.

Manufacturers can be taken on board to identify the origin of products.

After this, the custom authorities should inspect the factories in the country from which the goods were exported and see whether such facilities existed here in Pakistan or not.

Denial of $2 billion official exports would make no impact on the Indian economy, but if exports through third countries are effectively checked it would pinch India.

We have seen that traders react strongly if customs raid shops selling smuggled goods, but if as a first step the government conducts raids only for goods smuggled from India, it would have strong public support. Shopkeepers would not be able to protest in this case.

This could also become a first step in curbing smuggling. The government should warn that selling of illegally imported Indian goods was banned. After this warning, raids should be conducted. Public should be invited to point out selling points from where Indian items get sold.

Currently, Indian medicines, shampoos, toothpastes, soap, and Kolhapuri chappals, can be seen even at markets in the cantonment areas. There are designated bazaars in big cities that openly sell smuggled Indian items.

This should stop now. In fact, all smuggling should stop, but it would be easier under present circumstances to take action against Indian smuggled goods.

Pakistani government has not given MFN status to India, but barring around 1,000 items, everything else is importable from India at the MFN duties that Pakistan charges from other countries.

Now that India has revoked Pakistan’s MFN status and has increased duty on Pakistani cement, the

Pakistani government should also slap punitive duties on all Indian products.

In fact, this should have been done by now. The slow reaction of Pakistani planners gives India the advantage.

Prompt punitive trade measures from Pakistan could be justified globally, but action after a long period would put blame on the Pakistan.

Indians cannot dare to attack Pakistan militarily, but they can squeeze our economy through trade measures. They have been doing so for a long time.

When Pakistan got GSP Plus status from the European Union, the Indian government promptly subsidised its textile exports to neutralise the impact of that facility.

Moreover, to penetrate the Pakistani textile market, the Indian government provides its textile sector three percent additional incentive under the new market initiative.

Indians can do that because they have got the economic muscle. Pakistani government is cash-starved, and cannot offer such facilities.

However, Pakistan could curb the entry of Indian goods through both tariff and non-tariff barriers.

India is fully aware that after the opening of the China-Pakistan Economic Corridor (CPEC), Pakistani entrepreneurs may shift to Chinese raw materials, as the delivery time will be reduced.

Now that CPEC is at the operational stages, India thought it better to keep their hand above and create trade tensions.


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