Trade halt between India and Pakistan worries traders in Punjab and Jammu and Kashmir

The heightened political tension between India and Pakistan since the past one year has adversely impacted border economy of the region and traders in Jammu & Kashmir (J&K) and Punjab are worried about accumulating business losses.

A recently published book assessing the impact of ongoing India-Pakistan faceoff on border economies—Unilateral Decisions Bilateral Losses-- claims that around 9000 families in Punjab, 600 traders and 300 laborers in J&K suffered heavily due to political strains between the two nuclear countries.

The border trade managed to survive the Kargil conflict, Parliament attack and Mumbai attack, but is going through the worst uncertainty as the relationship between India and Pakistan, suffered major blow in wake of Pulwama attack in which over 40 CRPF personnel were killed followed by Balakot strike and subsequent suspension of bilateral trade between the two countries in 2019.

The books claims that the bilateral trade between the two countries stood at $ 2.6 billion in 2018-19, with India’s exports to Pakistan accounting for $ 2.06 billion and India’s imports from Pakistan at $ 495 million. India’s decision of withdrawing the status of Most Favoured Nation (MFN) for trade granted to Pakistan and imposition of 200% duty brought Pakistan’s exports to India from an average of $ 45 million per month in 2018 to $ 2.5 million per month in March-July 2019, until trade was completely suspended by Pakistan, it says.

The cross -LoC trade was happening from two route- Uri- Muzaffarabad and Poonch – Rawalakot where 21 tradable items were being traded. It was a zero-duty trade route where there were no financial transaction involved, and barter between trade-in and trade -out was balanced every three months. “Cross LoC trade was accused of many things and traders are suffering due to its closure. Therefore, we have repeatedly demanded formalizing this trade with proper banking system which Pakistan doesn’t want at this point. We will approach the Union government here at appropriate time demanding redressal of our grievances,” Rakesh Gupta, a prominent trader and president of Joint Chamber of Commerce, told ET.

Amritsar based Confederation of International Chambers of Commerce and Industries, director, Ashok Sethi said, “the Wagah-Attari land route was very important as 82% of India’s import from Pakistan came through this land route. Since February 2019, most of this trade has been affected which had a direct impact on the local economy. More than 9000 families comprising of traders, customs house agents, freight forwarders, labourers, truck operators and other service providers have been affected and are going out of business and closing shop.”

Currently, from the Punjab route there was limited movement of 5-7 trucks a day carrying herbs and dry-fruit from Afghanistan, compared to 200 trucks a day before the ban said Amritsar based exporter of fruits and vegetables Rajdeep Uppal.

The authors Afaq Hussain and Nikita Singla of Bureau of Research on Industry and Economic Fundamentals (BRIEF), a New Delhi-based research and policy think tank, say that following the deterioration of India-Pakistan ties in February 2019, traders have lost much business, dry dates have gotten dearer and prices of many good like cement and rock have remained volatile. “The numerous spinning mills in Ludhiana, a district of Indian Punjab has lost access to Faisalabad, a district in Pakistani Punjab that provides a valuable consumption base less than 300 km away. There is a similar story on the Pakistani side, where for example, rock salt that was primarily exported to India, lost a huge market next door, “said Hussain.