Should be taken as challenge by trade and industry


May 26 - June 01, 2003 




Normalcy in bilateral relations and resumption of trade between Pakistan and India is one of the topics which are hotly discussed especially in the trade and industry circles these days in Pakistan and obviously by their counter parts across the border.

Despite the factor that with the implementation of the WTO regime in 2005 and globalization of trade, the chequerred history of relations including two wars between the two countries have created a sense of mistrust among the people in general and business community in particular.

The trade and business has been divided on the subject for opening of trade borders with India. The group opposing the resumption of trade with India, especially from up country is of the view that India having advantage of economy of the scale in a large segments of industries has the potential to overwhelm the smaller industrial base in Pakistan hence the doors for free trade with India should be allowed. They argue that the cost of inputs including utility charges, rate of taxes and labour charges are too high in Pakistan which would give an edge to the Indian products in Pakistan. They are of the views that opening of doors with India may have crippling effects on Pakistan industry. They say that currently, the trade balance is heavily tilting in favour of India. Pakistan exports goods worth $400 million against $1400 trade by India to Pakistan. They plead that this trade imbalance is under the restricted conditions and you can imagine about the volume of trade favouring India if free trade is allowed.

Besides the economics, they also express bitterly against India on her overall behavior against Muslims in Kashmir.

On the other side, there are industrialists and traders who are strongly supporting the resumption of free trade with India. They have some valid reasons to support their stand on the subject. They said that being the signatory to the WTO regime we would be bound to open trade with India after December 31, 2004. Instead of fearing we must accept the challenge right now instead of waiting for two years. Zubair Motiwala, president of Karachi Chamber of Commerce and the Chairman of SITE Association of Industry pleaded that currently, Pakistan is successfully competing the Indian products in the international market especially in the United States and the whole of the European Union. When we have the potential to compete them abroad why not in Pakistan? Why should we afraid of the Indian products when we are producing products of much better quality as compared to Indian products. He cited the example of certain categories of textile products which have outclassed the Indians all over the world. For instance, Zubair said that our bed wear products have outclassed the Indian all over the world. There is no match in this category between India and Pakistan. Similar situation prevails in knitwear and certain cotton fabrics. Indians have an edge in georgette and some other silk products but as far as cotton textile was concern we are much ahead of them. Currently, Pakistan is importing entire textile machinery from far flung destinations. India in collaboration with international textile machinery companies was producing textile machines of the same standards and qualities. Importing textile machinery from India will reduce the cost of import.



In order to promote exports, everyone is looking for bigger markets. A huge market is available at a walking distance in India. We should take it as an opportunity instead of taking as an object of terror for our industry. If the trade and industry in Pakistan succeeds in finding market for their product in India, it will help improving their volume of production at the economy of scale to help bringing down cost of production also.

The trade between the two countries is carried out through illegal channels over the years.

Bazaar and markets in all major cities of the country are flooded with all sorts of varieties of Indian products. Who is the beneficiary of this illegal trade? Obviously the smugglers and those who are conniving this trade in both the countries. If this trade is made legal the benefit would go into the government kitty, thus those who are taking benefit of the situation are also opposing this positive development, said some industrialists.

As far as the legal trade is concern it is also carried out through involvement of a third country. The importers are not directly trading with India but they get the same products through countries in the Middle East or some other Far Eastern countries. If the trade is taking place why not through legal channels.

Soon or later the trade between the signatories of WTO rules has to take its way whether one likes it or not, but in the regime of economics taking advantage of the situation matters instead of loosing the game merely on the basis of likes and dislikes.

The rapid global changes taking place all around the world. Highly developed countries like US and EU are taking refuge by developing economic zone. In the Asian region we are missing this well proved concept of co-existence.