Sunday May 26, 2024

Informal trade

By Mansoor Ahmad
September 27, 2023

LAHORE: The tentacles of smugglers are spread all over Pakistan. The authorities are also aware of the routes from which smuggling takes place. They are also aware of places in Pakistan where smuggled goods are delivered.

Despite action at Pak-Afghan border, smuggled goods are freely available in Pakistan as Afghanistan is one of the several routes through which smuggling takes place. Buyers are also well aware of the markets from where they can get their required contraband. India is a big source from where Indian products enter Pakistan informally.

Informal exports from India to Pakistan save the Indian government the duty drawbacks that they would have to give to exporters in case of formal exports. However, this deprives Pakistan of the import levies that are collected via formal channels.

Indian borders are not as porous as the Pakistan-Afghan border which substantially limits informal entry of Pakistani products in India. If informal trade is effectively checked, it would push the Indians to remove non-tariff barriers to provide level playing field to Pakistani products so that Indian goods can be formally exported to Pakistan

Smuggled items from India include fruits and vegetables, textiles, automobile parts, jewellery, cosmetics, medicines, tobacco, herbal products and spices and herbs that reach Pakistan through informal trade without paying any government duties.

Major routes through which these goods reach Pakistan are India to Dubai to Iran (Bandar Abbas then to Afghanistan (Kandhar to Chamman and finally to Karachi). Another route used is India to Dubai to Iran to Afghanistan (Kabul) to Torkhum/bara then to Lahore and Rawalpindi.

The third route used by smugglers is India to Iran (Bandar Abbas) to Torkhum/bara and then to Lahore and Rawalpindi. The fourth route is from India to Afghanistan to Peshawar (Afghan Transit Trade). Minor informal trade also occurs through Chakoti border and Rohri near Bhawalpur, while some quasi formal trade is also conducted through Dubai.

Largest informal trade is of some Indian textile products like saris, bridal dresses and fancy suits. Textile products come informally into Pakistan from Gurdaspur through khepias (those who visit India specifically for smuggling purposes) and frequent family travellers.

Some goods also enter the country quasi formally through Dubai. The destination of most of these groups is Karachi. Automobile parts enter informally in the Pakistani market via Dubai-Iran-Afghanistan-Chamman/Torhkum or via ATT or Iran-Balochistan-Karachi route. Spare parts constitute 30 percent of this trade and 70 percent informal trade in this sector is of tyres.

High grade artificial jewellery is brought informally from India by khepias and family travellers via Dubai or ATT. Imported jewellery includes bridal sets, bangles and lockets.

Cosmetics enter Pakistani markets informally through the same routes and include Godrej products, Garnier beauty creams, Liril soap etc. All Indian medicines reach Pakistan through India-Afghanistan Peshawar route. The drugs include Aspirin, Amoxilin, Ampicillin, Cemetidine, Laxotanil, Co-trimaxazole, famotidine, Ciprofloxine and rentidin. Tobacco items include betel leaf which ends up in pan mandi Lahore. Gutka is destined for Nanakwara and Kharadar in Karachi. The route is Kerala-Mumbai-Dubai-Lahore.

Primary markets of Indian products informally brought in Pakistan are Bolton Market in Karachi and Shahalam Market in Lahore for textiles. For Auto parts, the markets are Ranchorline and Al-Noor Market in Karachi, Badami Bagh Lahore and Pirwadhi Rawalpindi. Primary markets for cosmetics and jewellery are Bolton Market in Karachi and Anarkali in Lahore.

Pakistani manufacturers have accused that as long as Indians have easy access to Pakistani markets through informal trade channels, their government would not get serious about removing non-trade barriers on Pakistani exports.