No trade with India!

While expansion of trade with India is a practical necessity, Pakistan cannot afford to ignore the cost

April 02, 2021

The federal cabinet has vetoed the ECC decision to import sugar, cotton and cotton yarn from India. It took less than 24 hours for the cabinet to say no to trade with the hostile neighbour. In his maiden decision as full-fledged finance minister, Hammad Azhar had, on Wednesday, announced “open[ing] trade with India and allow[ing] commercial import of 500,000 tonnes of white sugar” as the price of the commodity in the neighbouring country is “significantly cheaper than [in] Pakistan”. But a day later, i.e. yesterday, the decision taken at the level of the ECC, headed by Azhar, was deferred until the reinstatement by India of Article 370 of its Constitution, which guaranteed a semi-autonomous status for occupied Kashmir.

The Prime Minister is understood to have backed the lifting of ban on the imports from India as the summaries forwarded by the ECC for cabinet approval had already earned a go-ahead from the Prime Minister, who is also the Minister-in-Charge of Commerce and Textile. While the opposition calls the cabinet rejection a measure of no-confidence in the Prime Minister by his team of ministers, political commentators are appreciating the Prime Minster for accommodating the viewpoint of his cabinet colleagues and taking decision on an issue of national importance through consensus.

The cabinet may have been catering to popular sentiments, but the decision is grounded in the longstanding principle that guides Pakistan’s ties with India. Pakistan has all along been insisting that Kashmir is the major cause of its contention with India and once this longstanding problem is solved, all other outstanding issues will vanish automatically. India, on the other hand, emphasises on starting off with confidence building measures — like people-to-people contact, sports engagements, and business and trade — to normalise the relations slowly and gradually before taking up the core issue of Kashmir — and that too in the context of Kashmiri “terrorists”. A revival of trade ties with India through the import of sugar and cotton would have meant Pakistan succumbing to the Indian stance.

Meanwhile, from pure business point of view, the ECC’s import decision made perfect sense. Pakistan regularly sees supply problems with regard to domestic sugar, and the commodity is much cheaper in India anyway. Also, if trade ties with India are expanded, the government may actually be in a position to apply fair pressure on those responsible for the different commodity crises that keep hitting the country. Several agricultural goods are cheaper in India, and the cost of shipping is significantly lower than from most other countries. On the same note, the cotton import allowance would have been significant too, as last year’s crop was already sub-par, and the textile industry has seen a boom in foreign orders, leading to a potential supply shortage where smaller manufacturers may have been priced out if they were not given access to cheap imports.

While expansion of trade with India is a practical necessity, Pakistan cannot afford to ignore the cost. The warming of relations with the next door neighbour — which started off with the LoC ceasefire last month and exchange of letters between the prime ministers of the two countries — is unlikely to take an about-turn so early. The incumbent Pakistani government needs to bring clarity in how it has to move about the rapprochement process.

Published in The Express Tribune, April 2nd, 2021.

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