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Introduction:
Pakistan and India are the two major countries of Asia, which have strong political, trade and economic
relationship. Pakistan and India are the affiliate of South Asian Association for Regional Corporation (SAARC),
the most important goal of SAARC is to encourage economic and regional integration of the member state.
Before 2004, there was a low rate of trade between Pakistan and India, although, India had awarded Pakistan
the most-favored nation(MFN) status in 1996, the export from Pakistan to India was almost worthless for the
couple of years. In 2003 Pakistans export to India were $82million, and then it was at their peak in 2013 which
was almost $403million. In 2015 Pakistan, had decreased export to India around $312million. On the other
hand, import has quickly increased as trade affairs moved towards normalization. In 2003 import from India
increased to $2.18billion and then in 2015 it was $1.96billion.
Formal trade:
To be update, the phase of official trade between Pakistan and India remain worthless as compared to their
global trade volume and not a single country falls in the category of top ten trading partner of each other. There
had some agreements among academic economists in both the countries that the normalization of trade
relations would bring significant economic benefits equally. The reason behind this situation is the history of
being closed economies, but most important is the political frictions have influenced their mutual trade
relations.
The share of Indias in foreign trade in its GDP has increasingly steadily since the 1990s, but has remained low at
31% until 2003, whereas Pakistans trade directness stood at 38% in 2003.
As bilateral trade, pakistans total goods trade with india (import plus export) contributed a 3% of the overall
trade during the last 5 years. The share of india in pakistans total export is less than 1%, whereas in total import
it is fluctuating within 1.24% to 2.66%. the share of Pakistan in indias export is 0.45%
The commodity-wise composition of Pakistans trade with India during the last five years indicated that on
average 90% of Pakistan export to india in under the six broad categories, which is: edible fruits, nuts,
vegetables roots/tubers.
There is a recent research which shows that Pakistan grew its export to india during first eight months of 2016-
17 while curtailing import by 23%.
The measure categories of export to india is:
Above 80% of goods traded are raw material or intermediate goods. Both countries import and export in low
consumer goods, which will required further procedure to complete it and then being able to sell it.
There are some measure categories of India export to Pakistan:
Trade barriers:
As there are mentioned some barriers from all over the world, so here Pakistan implement tariff barriers for
import from India. The world integrated trade solution (WITS) suggest to reduced import-weighted average
tariff rates for the imports Indian products. During last five years, import of Indian products have increased
rapidly which currently consists of 1946 items. on the other side Pakistan exports are sluggish because india set
non-tariff barriers, such as
1) Unavailability of land trade facilitation:
a) Lack of infrastructure like, rail wagon, sheds, X-ray machine
b) Restraint on cargo system through Sindh route which take almost 10 days for loaded and unloaded
equipment.
c) Limited no of warehouses and cold storage facility either side of boarder
2) Technical barriers:
a) Strict Indian certification requirements by the bureau of Indian standards especially fortextile vegetables and
cement.
b) Different rules and regulations
c) Licensed issued only for 1 year
3) Non-clear and weighty administrative procedure and government policies
Reseach shows that more trade faciliation will provide gain for both countries and also for south asian
countries. Increasing in trade and exchange of goods will increase FDI flows to transboundry gas pipeline. In
the pre-colonial time, several significant trade routes ran through current Pakistanextending from Iran,
Central Asia, and Afghanistan in the west to India in the east. These routes were later severed by the
imposition of royally-era borders and poor relations with India.
The trade between two countries has influenced to create peace in south Asia. Some of the research prove that
japan is at a unique state to help, because of its dominance in auto sector in India and Pakistan. Honda, suzuki,
and toyota are presented in both of the countries, japan can pressurize pakistan to do to import from india and
to source parts from neighbour countrys companies in pakistan. Pakistan can import suzuki CKDs from India, on
the other hand pakistan can export Corolla to india. In this way, japan can played as k middle trade source and
help to create better relation in auto sector.
Trade between Pakistan and India helps to have effective economic stability amoung all over the SAARC, china
supports Pakistan kashmir dispute and CPEC is also effected by it which is recent economic activity of Pakistan
and china. If india reduced tariff then india can also improve their economy by involed in CPEC.
For Afghanistan TAPI project, generate more revenue for development and gas for industrial sector. For this
project, India will get benefit from this project and have economic growth, which cannot be possible with
energy supply in future.
Conclusion:
It is clear that Pakistans economic development depend on normalizing relation with India to cover a South
Asian regional economy. The volume of trade between both countries is very low around 2 to 3 % and there
should be concentrating to reduce tariffs. Pak-India shares a history, culture and boarder. Yet, trade between
the two largest economies in South Asia remains weak. Both countries have influenced on economic growth of
other countries like, Afghanistan, China, and Bangladesh.