WHY AFRAID OF INDIA?
SHABBIR H. KAZMI
Nov 7 - 20, 2011
Pakistan and India are two of the largest economies of the south Asia. They have the potential to complement each other but oppositely have been victim of war mania. Hawks present on both sides have prevailed over the moderates.
Kashmir has remained a thorn and is likely to be the biggest obstacle in the development of amicable relationship between the two countries.
Those pleading case for Kashmir insist that Pakistan should not liberalize trade with India until the issue is resolved and Hindu extremists are not ready to allow another division of India on the basis of religion. People of both the countries have been victim of war mania as billions of dollars are being spent every year on accumulating conventional as well as nonconventional arms.
Had the money spent by both the countries during last six and a half decades on purchase of arms been used for the development of infrastructure and welfare of masses, the landscape would have been entirely different and both the countries led the list of Asian Tigers.
The common perception is that if trade is allowed with India, Pakistan would become a net importer and most of its industries would be close because they could not compete with Indian manufacturers enjoying economy of scale simply because of the huge market size.
Experts are of the view that providing protection to Pakistani manufacturers will not be available indefinitely. Sooner or later, these manufacturers will have to learn to face the competition. India is not the only one but many countries have emerged as Pakistan's competitors particularly in textiles and clothing trade.
The two countries enjoy common border, rail and road link, elaborate agriculture and manufacturing sectors and huge domestic markets. They can complement each other and play a proactive role in the development of neighboring countries. Gone are the days when efforts were made for import substitution. Now the focus is on comparative advantage, countries focus on those sectors where they enjoy edge on other competitors. Even availability of indigenous raw material is no longer considered an advantage. Therefore, getting afraid of India's economic power and shutting the door to free trade is acting like ostrich.
A new debate has started in Pakistan lately that the decision to give India status of most favored (MFN) has been taken without taking the parliament into confidence. Ideally, the government should have followed the path but it seems there was haste and it was also apprehended that staunch opponents would try not to get the resolution approved.
The members of parliament seem split and opponents have a reason to blame the ruling regime of bypassing the parliament. Some experts say bringing the issue to THE parliament would lead to sentimental speeches but no decision would be made.
Some experts say that there was a pressure on Pakistan to give India MFN status for sometime. India has given Pakistan MFN status long ago but Pakistan has been avoiding reciprocating.
After 2010 floods, European Union wanted to give Pakistan some concessions. India not only opposed this, but took the issue to World Trade Organization. However, later on India softened its stance maybe because of any understanding that if it stops opposing the move, then MFN status might be granted. This was certainly a smart move by India.
Some cynics say unless Pakistan stops pleading its case on 'mercy grounds' it will have to agree to certain decisions which may not be in the largest interest of the country. Those opposing trade with India have very short memories. Often in the past, Pakistan facing some crisis had to look at India for help. The latest example is that Pakistan is importing a lot of eatables to ensure adequate supply of various products and stabilize their prices as a consequence of floods. Had the items been imported from any other country, the cost would have been very high.
A question arises if Pakistan can import any thing from India in times of crisis why can't a strategy be evolved where the two countries complement each other? Pakistan's mainstay is textiles and clothing industry providing employment to nearly 65 per cent of the total work force and also having the largest share in total exports of the country. However, the country has not been able to take advantage of made-in-India textile machinery and components. The reason cited for not using Indian machinery is low quality, which may not be a fact because such machines and components are used by the Indian textile industry producing goods of international standards.
Pakistan has to import sugar often to meet the shortfall in indigenous production and often the commodity is imported from India and it transpired that quality was inferior. Industry experts say that instead of importing refined sugar, Pakistan should import raw sugar from India and process it. In fact, to improve capacity utilization Pakistan should import sugar from global sources to overcome inadequate production of sugarcane.
Pakistan and India can join their hands in cotton production. India produces cotton, which has slightly yellowish color, which is most suitable for producing coarse counts of yarn. As against this, Pakistan produces cotton, which has relatively longer staple and is capable of producing medium to fine counts of yarn. Indian government follows a very strict policy that export of cotton will be allowed if country has surplus cotton and if at any stage it is realized that strategic stocks have reached the minimum benchmark, export of cotton could be stopped immediately.
Both Pakistan and India can be termed 'energy starved' countries. However, Pakistan enjoys an edge because it is a natural 'energy corridor'. On one side of Pakistan are energy rich Iran and Middle East and the other side energy deficient India. Similarly, the gas from central Asian States cannot reach India without passing through Pakistan. Therefore, unless the two countries join hands their energy requirement, particularly gas, cannot be met.