Pakistan To Restart Trade Ties With India After Nearly A Two Years Of Ban

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Pakistan’s newly-appointed Finance Minister Hammad Azhar on Wednesday announced that the government has decided to allow the import of sugar, cotton, and yarn from India. Pakistan had snapped trade ties with India following the scrapping of Article 370 in J&K in August 2019 and the division of the state into two new Union Territories.

According to local news reports, Pakistan’s top decision-making body, the Economic Coordination Council, allowed private businesses in Pakistan to import 0.5 million tonnes of white sugar to rein in local prices ahead of Ramzan. The difference in the price of sugar in the two countries is estimated to be 15% to 20% and the imports will help cover a minor shortfall and reduce prices. “The benefits will go to the poor of Pakistan,” Azhar said.

Prime Minister Imran Khan, who is also minister-in-charge of commerce and textiles, had approved the summaries of importing goods from India before placing it for approval of the Economic Coordination Committee (ECC) of the cabinet.

On allowing the import of cotton from India, Azhar said there was high demand for it because Pakistan’s textiles exports had increased but last year’s cotton crop was not good. “The price of the commodity in India is lower than what it is in Pakistan. The import of cotton and yarn through the Wagah border will help meet domestic requirements at reasonable rates,” Azhar said, adding that the import of cotton from India for small industries would take place until June.

“If opening trade with some country lessens the burden on the pocket of an ordinary person, there is no harm in it,” Azhar told a news conference in Islamabad. The trade is open until June 30 for the local private sector to import the sugar while cotton and cotton yarns could be brought in by both the private companies and Pakistan`s government bodies.

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“Indian cotton would be at least 4 to 5 cents per pound cheaper for Pakistan than supplies from other countries,” said Arun Sekhsaria, managing director of exporter D.D. Cotton.

India is the world’s biggest producer of cotton and the second-largest sugar-producing country. Pakistan was one of the leading buyers of Indian cotton until 2019. Direct trade between the two countries averaged $2.1-2.5 billion, while indirect trade via third countries was much more. Studies have shown that direct trade could touch $11-20 billion if trade barriers were lowered by the two countries.

There was no response from India to the development until late in the evening. The push comes amid a gradual thawing in ties between the two neighbors, which have fought four wars since gaining independence in 1947. The militaries of both countries released a rare joint statement last month, announcing a ceasefire along a disputed border in Kashmir. It was followed by an exchange of letters between the two prime ministers on the occasion of Pakistan’s national day earlier this month.

“We welcome the step to resume trade between India and Pakistan. We demand that the government should also resume cross-LoC trade, as J&K is witnessing a rise in unemployment. Those related to the trade, including businessmen, labourers, drivers, hotels and even restaurants in Uri (a connecting point in north Kashmir’s Baramulla) are having a tough time,” S. Samiullah, vice president of the Salamabad Cross-LoC Traders Union told The Hindu.

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