Delhi Exhibition Fosters India-Pakistan Trade Ties

Indian and Pakistani business owners this week descended on an exhibition in New Delhi aimed at improving trade linkages between the countries.

In 2011, when India and Pakistan resumed a bilateral discourse, commerce was billed as a key confidence-building measure to reducing distrust and lowering barriers.

Displaying her products from Karachi, Pakistan — elaborate, hand embroidered traditional garments such as saris and salwar suits — Parveen Qaim Khani is just one of thousands now urging government officials on both sides of the border to follow through with those measures.

“We are neighboring countries with common customs and culture,” she said, adding that citizens on both sides have great affection for each other and there should be no quarrel between the countries.

Khani believes initiatives of exactly this kind — the four-day exhibition is designed to showcase fashion and lifestyle products from Pakistan — are critical to deepening cultural ties and normalizing trade.

Untapped potential

The head of the Trade Development Authority of Pakistan, S.M. Muneer, points to the massive untapped potential between two countries.

He says Pakistani business owners need machinery, chemicals, technology and much more from India’s bigger economy.

“The liberalization of trade would benefit Pakistan producer[s] in terms of developing [their] own brand, lowering costs of production, [and increasing the] easy availability of raw material and cheap transportation,” he said. “At present, Pakistan is paying 40 times more transport cost by trading with European countries and USA. Both countries can develop strategies to trade with rest of the world by specialization in those products wherein they have comparative advantage.”

However, progress has been painfully slow. While both countries set a target for bilateral trade of $6 billion by 2015, the total came to just $2.7 billion last year.

Business owners point to the many impediments between two countries, whose festering dispute over the divided region of Kashmir has defied resolution.

Heavily militarized borders restrict opportunities to establish trading posts, which slows the movement of goods. Tariff barriers also remain high and the rival South Asian nations remain virtually devoid of officials financial channels.

Despite these hurdles, however, indirect trade continues to flourish, with Pakistani merchants often buying Indian goods via third countries such as Dubai.

The president of the Federation of Indian Chambers of Commerce and Industry, Sidharth Birla, says both governments must dismantle barriers that restrict trade.

“Despite progress, visa problems are still faced by business communities of both countries,” he said. “While our banks express interest in opening branches, there is no direct banking channel between India and Pakistan. Opening up of important trade routes is imperative, as it would save time and transaction cost of business on both sides.”

Attractive market

While Pakistani business owners call India’s huge middle class an attractive market for Pakistani goods, Indian entrepreneurs say the creation of energy pipelines to funnel gas from Central Asian countries via Pakistan would lower costs in the energy-starved country.

Such projects have been planned but made virtually no progress due to India’s fears of sabotage by Islamic militants based in Pakistan.

The President of the Federation of Pakistan Chamber of Commerce and Industry, Zakaria Usman, says business owners and entrepreneurs on both sides must nudge their governments in the right direction.

“My question is that if China and Taiwan can work together, why don’t we? Because I believe that to get together of the business people is most important and people to people contact is most important between both the countries,” said Usman.

When Indian Prime Minister, Narendra Modi, took over in May, hopes were raised that he would work in this direction with his Pakistani counterpart. Both are pro-business leaders. However, another diplomatic spat last month scaled down expectations.  

But business owners hope the growing cordiality between people in the two countries, helped by events like the Pakistan trade exhibition, will build momentum.

India too has held similar events in Pakistan, and analysts point out that protests and calls to ban the exhibition by a Hindu group, the Rashtrawadi Shiv Sena, failed to disrupt the event.

Thousands of people flocked to snap up the Pakistani textiles and garments on display in New Delhi, and the consumers appeared enthusiastic.

Analysts have urged both countries to follow the route that India and China have taken, building a thriving business relationship despite lingering border disputes.

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