Pakistan and India both
got independence from the British Empire in late 1940’s Just after the
independence both the countries had started war because of Kashmir. Since then
five wars (1948, 1965, 1971, 1985, and 1998) have been fought between the two
neighboring countries. Unfortunately both the countries are not serious in
solving the Disputed Kashmir issue. Pakistan and India are among very few
countries in world whose citizen cannot enter even in neighboring country
without visa. Due to visa sanctions and other issues between them both countries
don’t have trade across borders.
India is an emerging economic power and Pakistan is blessed by natural resources
country, plus both countries are among the biggest sectors of agriculture in
world. The presentation situation of trade between both countries is more than
worst. Though trade between the two countries has increased in the last couple
of years, it is still far from reaching its potential, and remains extremely
vulnerable to political fluctuations. In 2012-13, trade between India and
Pakistan totaled $2.4 billion that is only 3.2% of total Pakistan annual trade
(imports + exports) this is world lowest trade percentage between two
neighboring countries.
There are a no of reason behind this worst situation of INDO-PAK trade. The
basic and foremost important reason in political situation in both countries.
Both haven’t give the transit rights to any one of them. Pakistan has no assess
to Nepal, Bangladesh, Bhutan and Srilanka via Indian Territory and also India
can’t reach landlocked Afghanistan and other Middle Eastern countries through
Pakistani Soil. This badly affects trade potential of both countries with each
other and even with other neighboring countries. If both countries are giving
the transit right to each other, the trade between will increase by 3 time and
their exports of Pakistan and India.
The agriculture sector is an integral part of both India and Pakistan’s economy.
In the case of GDP it contribute 25.4% and 14.7% of Pakistan and India
respectively. Agriculture also generates employment for over 45% of the Pakistan
labour force and 58.2% of the Indian labour force. The structure agriculture in
India is different from pattern of Pakistan. Indian agriculture has been
dominated by the rise of cotton production, trebling in only the last 10 years,
after it adopted bio-genetic varieties. Similarly India produces more rice per
capita than Pakistan; Whereas Pakistan has grown substantially in livestock
production.
The floods of 2010 played havoc with the Pakistan agricultural sector, but there
has been a recovery in the last 2 years. Most recently, 2011-12, the agriculture
sector grew by 3.1%. And in 2012-2013 by 2.9% (World Bank). The major crops in
Pakistan include wheat, rice, sugar and cotton which contribute 31.9% to the
value addition in overall agriculture and 6.0% to GDP. Minor crops (tobacco,
mustard, rapeseed, mung, potato, mash, etc.) account for 10.1% of value added in
overall agriculture. Wheat, rice, cotton and sugarcane have remained the most
important crops, cultivated on 42%, 11%, 13% and 5% of harvest-able land,
respectively. Livestock production, on the other hand, holds a share of 55% in
Pakistan’s agriculture grow at rate of 4.2 in 2012-2013
Pakistan’s imports from India grew significantly in the food and beverage sector
after 2003. A major portion of this growth has been in agriculture commodities.
The current trade in agriculture is in favor of India. The value of the top ten
commodity exports from Pakistan to India is only around US$ 50 million, while
the top ten imports of agriculture related products from India amount to over
US$ 500 million. Pakistan is also increasingly importing fresh vegetables from
India. In terms of exports, dried dates are the only major commodity being
exported by Pakistan. Pakistan exported US$ 44.2 million worth of dates in 2010
and around US$ 47.2 million worth of dates in 2011 to India. This represents
about 74% of total export of dates by Pakistan, whereas for India this
constitutes 98.2% of its total import of dates from the world. This suggests
that Pakistan’s top export to India has limited growth potential. Onions and
shallots are the fastest growing agricultural exports from Pakistan to India,
having crossed US$ 2 million by 2011. In 2012-13, these exports continued due to
shortage of onions in the Indian market. In 2013, onions were selling (retail)
at Pakistani Rupees 150/kg in India, while in Pakistan the price was Rs.60/kg.
Pakistan has captured a significant share of India’s total imports of onions,
shrimps and apricots. For other major commodities such as fruits and vegetables,
Pakistan only accounts for less than 5% of India’s total import demand. Given
Pakistan’s competitive advantage in fruits, trade normalization may open up
opportunities to gain a much larger market share. In terms of import, all of
Pakistan’s imports of tomatoes came from India, and all of Indian exports of
tomatoes go to Pakistan. Similarly, India is capturing an increasing share of
the fresh vegetable market in Pakistan.
The figures and written picture of trade presented above clearly suggests that
efforts in normalization of trade between the neighboring countries will begging
to have an impact on size of trade between the two countries. Until now, the
benefits has been tittle towards India, as India has gain a vast market share in
Pakistan. However, given the profile of Pakistan’s agriculture sector there are
certain products that are high quality and have strong international
competitiveness, have a strong potential to attract significant demand in Indian
markets. Pakistan can generate significant export revenues by exporting
horticulture and agriculture by-products to India. Mango, citrus, peaches and
olives exports present immense opportunities for Pakistan. The demand in India
is significant for these fruits. Moreover, for mangoes, the season complementary
is a significant factor - as the mango season finishes in India, Pakistani
season is at its peak. This provides a convenient, natural window for export.
Similarly, kinnow’s (citrus) from Sargodha have made their mark globally and are
being exported to different countries.
The product that has the highest trade potential is ethyl alcohol. This is a
waste by-product of the sugar industry and is used as a fuel. The large Pakistan
sugar industry produces ample quantities of ethyl that can be exported to India.
Other products with a revealed comparative advantage and export potential
include fruits and vegetable, uncooked pasta and honey. In negotiating with the
Indian side on market access, specific emphasis should be given to these
products.
Pakistan also has a competitive advantage in fish and fish products. In March
2013, the self-imposed ban on exporting fish to Europe was lifted reflecting
that food safety measure in the fish processing industry of Pakistan have
significantly improved. India offers a large market for processed fish, shrimps,
prawns and other value added fish varieties.
Pakistan and India must continue and increase their economic activities
irrespective of their border and political disputes. The success of this,
however, will depend on the extent of cross border investments