The announcement to resume trade with India and its subsequent retraction have raised certain questions
Late last month, there was news that Pakistan would open limited trade with India and buy sugar and cotton from it to meet the burgeoning demand in the country.
For many years, Pakistan has been getting low yields of cotton and importing the commodity from Uzbekistan, the United States and Brazil. This involves significant transportation costs. The local cotton crop is facing the yield challenge because of low quality seed and plant diseases that have made farmers reluctant to grow it.
Sugar is in short supply - though there are those who suspect that traders have stocked large quantities of it in anticipation of higher prices in Ramazan. There have been allegations that the sugar mafia prospers under the direct patronage of influential people in the government. The fact that major sugar industry players were given subsidies on costly sugar in the past to make it competitive in the international market and exportable does not make sense.
What happened was that the Economic Coordination Committee (ECC) had recommended importing half a million tonnes of white sugar to meet domestic demand as Pakistan was expecting a shortage equal or close to this amount. It had also recommended importing cotton as Pakistan was expecting a yield to the tune of 7.7 million bales against a demand for 12 million bales. It is unfortunate that a country like Pakistan whose prime exports are basic textiles and textile products is unable to grow cotton to match its demand. The demand for cotton has increased as the country’s exports have increased during Covid and due to trade barriers imposed by the US on China. As the US is not importing textile goods from China, Pakistan has an added opportunity to export to the US.
Soon after this announcement, the federal cabinet, headed by Prime Minister Imran Khan, rejected the idea of importing the commodities from India. It said that trade could not be opened till autonomy was restored to the Indian Occupied Kashmir. Moeed Yousaf, the national security adviser, tweeted that the PM wore two hats and that his opinion was different on both occasions. Analysts are still not clear as to which lobby was responsible for this reversal of a major decision.
The business community on both sides of the border has hoped for a phased resumption of trade after the statement by Army Chief Gen Qamar Bajwa that Pakistan and India should bury the past and move forward. The announcement about importing goods from India appeared to be a sequel to this statement. However, things changed the moment the decision was withdrawn and bilateral trade was made conditional on lifting of curbs in the IOK.
Businessmen on the other side of the border have also reacted to the announcement and its retraction. In a press statement, the All India Sugar Trade Association (AISTA) chairman Praful Vithalani said a resumption of bilateral trade would be a win-win situation for both the countries. His point was that access to essential commodities should be above politics and trade and conflict resolution could go on side by side. He pointed out that India was the second largest sugar producing nation after Brazil and had sufficient surplus stocks for export to Pakistan via land route.
The business community on both sides of the border has hoped for a phased resumption of trade after the statement by Army Chief Gen Qamar Bajwa that Pakistan and India should bury the past and move forward.
Does Pakistan have alternative sources to procure these commodities or not? Does the cost of these commodities and their transportation make business sense?
Raza Baqir, the Punjab chapter secretary general of All Pakistan Textile Mills Association (APTMA) tells The News on Sunday (TNS) that importing cotton from places like the US and Brazil was costlier. He said the cotton from these countries also takes longer to reach Pakistan. However, it reduces the industry’s dependence on Indian cotton.
Baqir cotton is imported from Uzbekistan through sea route (via Caspian Sea) which takes a long time. Therefore, he says, they have asked the government to streamline things at Torkham border so that raw cotton from Uzbekistan can reach there via land route. For the moment, he says, the route is not an easy option because of security issues and tedious customs procedures etc. Once things improve on these counts, he says, Pakistan will be able to source large quantities of cotton via land route.
Pratyush Ranjan, a senior editor at Jagran New Media in India, has commented on the prospects and history of Indo-Pak trade. A digital journalist with 16 years of experience and a certified fact-checker associated with Google News Initiative India Training Network, he cites a newspaper report that tracks the history of Indo-Pak trade post Partition. As per the report: about 56 per cent of Pakistan’s exports were to India, and 32 per cent of its imports came from India in 1948-49. Also, India and Pakistan used a number of land routes for bilateral trade during 1948-65. India remained Pakistan’s largest trading partner until 1955-56. Between 1947 and 1965, the countries signed 14 bilateral agreements on trade, covering avoidance of double taxation, air services and banking, etc. In 1965, nine branches of six Indian banks were operating in Pakistan.
But now, Ranjan tells TNS, poor diplomatic relations and on-going issues in the bilateral relationship have reduced the trade to near zero. This has severely impacted livelihoods of the families involved in cross-border trading activities. He says it is high time for the governments on both sides to focus on trade with honesty and an open heart and do whatever is possible to maintain better bilateral ties for the good of people in both the countries. “Let peace prevail everywhere.”
Nauman Kabir, chairperson of Pakistan Industrial and Traders Associations Front (PIAF) says many countries like those in Europe who have had a disturbed past are doing regional trade and looking forward. The possibility of Indo-Pak trade can also be discussed subject to certain conditions. But, he says, it is a matter of shame that Pakistan has to look towards India to get products in which Pakistan should have been self-sufficient. Kabir says the government has failed to produce disease-free cotton seed on a large scale for many years and to counter the exploitative moves of sugar mafia that has been hoarding sugar to the detriment of the consumers. He says the price of Pakistani sugar is touching Rs 125 per kg. A major reason for this is that hoarders want to sell it at premium rates and profiteer during Ramazan.
Against this backdrop, the questions as to what qualifies as a breakthrough for at least the two countries to resume trade and how Pakistan, capable of producing surplus cotton and sugarcane, can become self-sufficient in this context are of great significance. Till then it will have to look beyond its borders and sources other than India.
The author is a staffer and can be reached at