Govt urged to open Wagah for trade

Trade with India can reduce freight cost, increase efficiency

KARACHI:

Regional trade not only offers the promise of economic growth but also acts as a cushion against incidents of climate disaster.

Businessmen in Pakistan, hit by the recent flash floods, have urged the government to open trade with India through the Wagah border. The corridor is one of the most efficient trade routes to help with mitigating food insecurity and the economic crisis currently developing.

Businessmen Group (BMG) Chairman, Zubair Motiwala and Karachi Chamber of Commerce and Industry (KCCI) President, Muhammad Idrees appealed to the government to “immediately allow the import of raw cotton and food items, including vegetables, fruits, grains and other essential products, from India through the Wagah border as Pakistan faces severe shortages caused by the devastating floods.”

The BMG chairman pointed out that “in addition to the devastation caused and losses of up to billions of rupees, a food crisis has also been triggered as agricultural crops, land and livestock have been damaged and remain inundated.”

“Raw cotton, dates, chilies, cauliflower, onions and other fruits and vegetables in Sindh and Balochistan have been destroyed. Therefore, it has become inevitable to open up the Wagah border and allow imports of agricultural crops from India so that our country’s food needs can be met. This offers us supplies within the shortest possible time at competitive rates from our neighbouring country,” he added.

Speaking to the Express Tribune, Saqib Hussain, Senior Equity Analyst at Alpha Capital, said that “Due to shortages, food inflation was around 5% in the last two months, but due to the influx of vegetables from Afghanistan, prices have fallen.”

“If the government allows further imports, it will cool down our inflation outlook going forward,” he added. “Moreover, Pakistan can import cotton from its neighbouring country as we are short on cotton, which is a basic raw material for the export-oriented textile industry. We have lost 20% of our cotton crop so we may need to import 6 million cotton bales. Textile companies are under the pressure of order completion and we fear that our companies will lose some orders and that impact will be apparent in next quarter’s results,” explained Saqib.

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The KCCI president Idrees stressed that the “government has to act promptly and sensibly in this regard to avert a severe food crisis. According to estimates, 65% of Pakistan’s main food crops including 80% of its wheat, rice and raw cotton have been completely swept away by the floods. In addition, more than three million livestock have also died.”

“Given this scenario, the wisest move would be to import these products from India with lower logistic cost and time as compared to other countries,” he proposed.

Pakistan Businesses Forum (PBF) CEO, Ahmad Jawad said, “Indian agricultural products can also be sourced from Dubai to improve the supply situation in the domestic market, in case Islamabad does not allow direct trade with India.”

“However, that is not a cost-effective option,” he warned. “A better alternative is to import these products directly through the Wagah border, to save both time and money,” explained Jawad.

AKD Securities CEO, Farid Alam also agreed with this proposal. “India is a big producer of vegetables and they are cost effective too. Plus, the freight cost is always the lowest in regional trade. However, the government should be careful in estimating the import demand and should ensure that inventories imported are used to manage supply-demand gaps only.”

Highlighting that the sharp hike in the price of vegetables, and other commodities, made them unaffordable for the common man, Idrees stressed that, “The government must immediately allow agricultural imports from India so that prices can stabilise and people are saved from hunger and starvation.”

Published in The Express Tribune, September 16^th, 2022.

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