Pakistan’s Missing Market. Resuming trade with India is a chance to escape spiraling crises.

[Cheepek]

It is not in India's interest to trade with Paxtan in the near term. Maybe after one or two decades.

 

[nahtanbob]

It is not in India's interest to trade with Paxtan in the near term. Maybe after one or two decades.

It is not like India is a land of honey. It is in a much better situation than Pakistan. But India could use all the trading partners to improve her negotiating position with the bug guys (read: China and USA)

 

[Cheepek]

It is not like India is a land of honey. It is in a much better situation than Pakistan. But India could use all the trading partners to improve her negotiating position with the bug guys (read: China and USA)

Elucidate, negotiating position how and in what?

 

[my2cents]

Pakistan does not have the luxury. It is projected to have yet another 200,000,000 mouths to feed by 2050. The only emotions worthy of affecting foreign and trade policy are ones that envision future mass starvation that

Look back on history. In November 1970 east Pakistan was struck by devastating cyclone and some 300000 people died. Your response was not prompt nor adequate and your people were upset. They voted Mujib party to power in 1971 with overwhelming majority. What was your response to power sharing with Mujib? A total denial of the election results and subjugation of your people with brute force. Some 3 million were brutally murdered and another 10 million became refugees in India. Yet after the loss of East Pakistan, you still deny democratically elected government to complete their terms. You guys have not learned anything from that.

 

[my2cents]

It's what's kept us independent

If the Kashmir situation has not occurred, their was a massive risk to Pakistan

The commonality amongst south Asians, the common language, culture etc

If the Pakistani and Indian economy was too open our elites In Pakistan would cared for their own wealth and benefits and would have sold Pakistan out for wealth giving India influence over Pakistani


The enmity over Kashmir ensured freedom and independence of Pakistani from.india

Our failure wasn't hatred with India, it was not making basic improvements within our politics, economy etc

What has trade got to do with enmity? US has enmity with China but they trade. India has enmity with China, but we still trade. Japan has enmity with China, but they trade. Europe still buys oil and gas from Russia.

 

[nahtanbob]

Elucidate, negotiating position how and in what?

It is a simple question - do you want 40% of your exports go to the USA or 20%. I should ask which one is better in the long run.

 

[Cheepek]

It is a simple question - do you want 40% of your exports go to the USA or 20%. I should ask which one is better in the long run.

Oh, well we have hundred other countries where we can diversify our exports to. We can focus those and come back to Pakistan when we feel the pros outweigh the cons.
Dealing with a hostile state at this point just brings us more headache with very little incentives.

 

[The Accountant]

I have little hope for Pakistan being pragmatic when its economy was sliding. After 5th Aug 2019, Imran banned trade with India. That impacted Pakistan's economy big time. Probably India factored this, that with their move they would further kill their economy.

Pakistani's main dimag ke kami hai, emotions se decisions lete hain.

Any facts and figure to support your argument ?

@Meengla , this was my assessment too, on the other thread.

Paksiatn needs to be a little pragmatic and weigh all its options in this regard. Starting trade with India May not be a bad proposition. Paksiatn would gain more from that trade.

Any facts ?

@Meengla , this was my assessment too, on the other thread.

Paksiatn needs to be a little pragmatic and weigh all its options in this regard. Starting trade with India May not be a bad proposition. Paksiatn would gain more from that trade.

Any facts ?

Pakistan’s Missing Market

Resuming trade with India is a chance to escape spiraling crises.

foreignpolicy.com

As Pakistan lurches from one crisis to another, it needs a fundamental rethink of its geopolitical and economic strategy. Without it, any International Monetary Fund program—the most recent being a “stand-by arrangement” for around $3 billion, approved on July 12—only buys some time before the next cataclysm.

Pakistan must start putting sustainable and inclusive economic growth above all else, especially its elite-focused policies that have created a cycle of profligacy and austerity. Average annual economic growth between 2010 and 2022 has been lackluster, around 4 percent, and has been accompanied by a rise in Pakistan’s total debt as a share of its GDP, from 55 percent to 76 percent. Bangladesh, in contrast, grew at an annual average of 6.2 percent over the same period, while its debt to GDP ratio rose from 30 percent to 39 percent.

In addition to addressing spiraling debt, faster and more inclusive growth is the best pathway for the poor and vulnerable to join the middle class.

The big step Pakistan could take to reinvigorate growth would be to embrace trade with India, which is currently almost nonexistent. World Bank research, on which I worked, reveals that Pakistan’s exports could increase by 80 percent, with commensurate impacts on GDP and employment, if it had a normal trading relationship with India. Extrapolating from these estimates, Pakistan’s exports of goods, only a mere $31.5 billion in 2022, could be about $25 billion higher if trade with India was realized. Another World Bank study shows that India accounts for as much as 85 percent of Pakistan’s total unrealized trade potential.

Deeper economic engagement with India could also help address other acute problems in Pakistan’s economy, including rampant inflation, which has led to an increase in poverty over the last year; a rent-seeking private sector that constantly lobbies for protection and favorable tax treatment; and the long-standing energy crisis, exacerbated by the ongoing economic calamity. Given the free fall of Pakistan’s economy since 2022, trade with India could prove very valuable.

Trade with India has been virtually halted since 2019, following the Pulwama terrorist attack in India and the passage of the Jammu and Kashmir Reorganization Bill. Currently, Pakistan allows imports from India on an ad hoc basis. For trade to normalize in a way that allows Pakistan to reap its full benefits, Pakistan would need to first rescind the ban on imports from India, and India would need to remove the penal duty of 200 percent on Pakistani imports. These could be followed by Pakistan giving India “most-favored nation” status—the same tariff treatment as given to other trade partners—and India reinstating such status to Pakistan; both countries agreeing on a timeline for rationalizing tariffs; and Pakistan doing away with trade restrictions on land borders.

The effects would be swift. Under normal trading arrangements, Pakistan’s imports from India, like its exports, would increase significantly. Had Pakistan allowed standard imports from India, they would have helped alleviate back-breaking inflation affecting critical products such as wheat and onions (India is among the world’s top exporters), and mitigated the impact on the poor. Given the sensitivity to inflation in South Asia, the political benefits of inflation-reducing imports should not be underestimated.

Trade with India could also help increase competitive pressure and productivity in the domestic market. Moreover, the availability of an immense Indian export market could excite Pakistani entrepreneurs and introduce some added pressure on entrenched domestic industrialists. A larger market may also allow the incumbent players to be somewhat more generous in ceding space to potential competitors from Pakistan and India.

And then, on the energy front, India already exports power to Bangladesh and Nepal and has significant surplus capacity. Its solar power prices are amongst the lowest in the world. Given the easy geographical terrain, Pakistan can ameliorate its power crunch by importing power and refined petroleum from across the border in the Punjab, thereby fulfilling the promise of an earlier dialogue that stalled for political reasons. It might even herald a very promising renewable energy partnership.

In this way, a vibrant trading relationship with India can help Pakistan to realize significant structural gains in an organic rather than mandated manner: by inducing productivity improvement and innovation, reducing price distortions, and enabling higher inflows of foreign direct investment. These are well-known gains from trade, but given the immense underexploited potential of bilateral trade, such gains are likely to be quite important for the Pakistani economy.

A key question is whether Pakistan’s military, which in effect wields veto power, would go along with this trade-centered approach. It might—for both tactical, short-term reasons, and for longer-term security benefits. During the very hopeful 2011-2012 attempts to normalize trade between India and Pakistan, it was vested economic interests (such as the agriculture, automobile, and pharmaceutical lobbies), rather than the army, that prevented the final steps from being taken. Now that Pakistan is suffering from unprecedented economic hardship, the army has become a partner in an “economic revival plan” that focuses on exports and foreign investment. Given the plan’s focus on dollar inflows and investment, the army may not be averse to reaping the benefits of engaging with the “enemy” economy.

In addition, the army might prefer to not have two active borders to deal with. Pakistan’s relations with Afghanistan have deteriorated over the past two years, and consequently, its defense forces are quite busy on its Western border as they deal with cross-border and local attacks against the military and civilian population from the Taliban. In this situation, a quiet border with India—a cease-fire between Pakistan and India has largely held since February 2021—is an attractive proposition. Cordial trade relations could help in meeting that goal.

Woww an article on economic suggestion without a single fact.

Hight of stupidness. The person dont even understand the basic concept of economic growth. Economic growth generates from production efficiency and capability.

 

[kris]

Pakistan needs to look at its priorities should implement following 3 points to begin with, but question will be are they ready to change or move on ?

• Convert LOC to International border and make peace with India.
• Dissolve establishment and keep a Self Defense Force.
• Start trade with India and give emphasis on regional trade with local currency

Point 1 will be unacceptable for both countries

 

[my2cents]

Economic growth generates from production efficiency and capability

Pakistan should work on helping it's ailing manufacturing industries before it opens its economy to trade.

When a company/country optimizes its production processes, it can produce goods and services efficiently with fewer input resources. It cuts costs by reducing waste. This improved efficiency often leads to more profits to the company and in some cases lowering of prices of finished products which will ultimately benifit the end consumer.

Also, by enhancing its capabilities through technology, skills, and innovation(which Pakistan lacks at present) a company or organization can expand its product offerings and enter new markets.

As production becomes more efficient in a country, it not only boosts productivity but also stimulates economic activity.

 

[nahtanbob]

Hight of stupidness. The person dont even understand the basic concept of economic growth. Economic growth generates from production efficiency and capability.

efficiency means the cheapest price for inputs and maximum price for outputs

 

[my2cents]

efficiency means the cheapest price for inputs and maximum price for output

Pakistan's textile industry struggles amid economic crisis

Pakistan's textile industry, which makes up 60% of the country's exports, has been hit hard by competition from other Asian countries, as well as the economic slowdown and political instability.

www.google.com

 

[firohot4321]

we are not capturing any market dude, we are only looking for relatively cheaper imports
we are in that position
15$B+ of our imports is just petroleum
Best import substitution we can do rn is by investing in coal, solar, hydro
nothing to do with india
which we are with our limited means, I'll be honest
EV rickshaw, motorcycle, only coal power plants from now on, incentivizing solar and hydro dam projects
We are moving in the right direction on that front

only thing we'll be importing from them are some machinery, agricultural produce or at best some coal all of it at a much cheaper cost as our infrastructure is connected from highways to rail lines
most of our consumption market is up north so even fuel and transportation costs comes down

For petroleum we need to open trade with Iran not India

Main issue for Pakistan economy other then corruption is energy
For that we need to have opentrade with Iran
Already a lot of Iranian oil and goods come via smuggling
Why not regularize it

As for India open trade in current conditions would be final nail in coffin for Pakistani industry
Indian imports would kill em
Leading another economic crisis of job loss and unbalance of payments

Pakistan is self-sufficient in wheat sugar and other such commodities it's the hoarding stocking mafia that created the artificial shortage and price hike instead of fixing it we are being advised to go for throwing away our megar reserves on Indian imports??

 

[The Accountant]

efficiency means the cheapest price for inputs and maximum price for outputs

India is not the ideal market to fetch max price and nor the hub for cheapest raw material.

 

[kmc_chacko]

Point 1 will be unacceptable for both countries

India will never attack Pakistan and take back P.A.K and Pakistan doesn't have the capacity to take back I.A.K so, sanity must prevail.

If we want good relations, then we both need to start from somewhere.