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India-Pakistan Ties and its Impact on the Economy of Indian Panjab

By Prof. Tridivesh Singh Maini

Last month, Pakistan’s Foreign Affairs Minister Bilawal Bhutto Zardari spoke in favor of engagement with India, batting for trade links, during the course of an address at an Islamabad based think tank. While bilateral trade between India and Pakistan through the Wagah (Pakistan) -Attari (India) land crossing had been shut by Pakistan after the revocation of article 370 in Jammu and Kashmir in August 2019. Bilateral trade between both countries was impacted after India’s decision to revoke the MFN Status it had provided Pakistan in 1996 in February 2019, as well as the imposition of 200% customs duties on goods imported from Pakistan.

Pakistan PM Shehbaz Sharif during the course of a media interview with a Turkish media outlet, in June 2022, had also said that bilateral trade between India and Pakistan would result in a win-win situation for both countries. The Pakistan PM categorically stated:

“We are cognisant of the economic dividends that can be accrued from a healthy trade activity with India,”

Top Pakistani industrialist Mian Mansha has also spoken in favor of not just reviving trade relations with India, but also giving a boost to people-to-people linkages via tourism.

While in the imminent future, revival of bilateral trade via the Wagah-Attari land crossing may seem to be an uphill task, given the fervent opposition of certain lobbies—due to political and economic reasons—to the resumption of trade linkages. In 2021, the Economic Coordination Committee of the Imran Khan led Pakistan Tehreek E Insaf government had lifted a ban on the import of sugar and cotton from India. This move was scuttled after cabinet members with Khan’s cabinet opposed normalisation of ties.

It would be pertinent to point out that in spite of numerous economic challenges, Pakistan has been purchasing essential commodities at exorbitant prices from other countries. Pakistan has been importing large amounts of wheat from Ukraine and Russia. In 2020-2021, Pakistan’s wheat imports from Russia and Ukraine exceeded 2.1 mega tonnes.

Pakistan could import wheat from India, via Wagah-Attari at much cheaper prices and farmers from Panjab (India) could get a much better price for their produce, especially commodities like wheat, if they were allowed to export to Pakistan.  The economy of the border areas of Panjab (India)— specifically Amritsar, Gurdaspur and Taran Taran Sahib districts —referred to as the ‘Majha region’ have been especially impacted through the disruption of trade since 2019, as there have been numerous job losses in a number of sectors. According to estimates nearly 10,000 families have been impacted by the disruption of trade via the Wagah-Attari land crossing. A number of Panjab based business groups as well as activists, apart from some political leaders have been fervently batting for re-opening of trade. 

While trade may have been disrupted via Wagah-Attari, it is happening through neutral countries such as UAE and Singapore. Many analysts argue that the main reason for trade via the Wagah-Attari land-crossing is not just related to India-Pakistan bilateral relations, but also lobbies which have benefited from trade via neutral countries or other circuitous routes.

Moreover, the Wagah-Attari land crossing has been used for transportation of relief materials to Afghanistan. India has sent  33,500 metric tonnes (as of June 2022) of wheat to Afghanistan in partnership with the World Food Programme via the Wagah-Attari land-crossing.

While resumption of bilateral trade is imperative, it is likely to face numerous obstacles at least in the short run. People- to-people linkages between India and Pakistan have seen a revival (though they are still way below the actual level of potential). While the Kartarpur Religious Corridor which connects Dera Baba Nanak (Panjab, India) with Darbar Sahib (Kartarpur, Narowal, Punjab, Pakistan) re-opened in  November 2021 after a hiatus of one and a half year, visas have also been issued to Sikh and Hindu pilgrims over the past few months under the  bilateral protocol of 1974 on visits to religious shrines. The Kartarpur Corridor has also facilitated meetings between members of separated families from both sides of the divide and also helped in removing misconceptions between ordinary people. Due to a number of logistical issues; requirement of a passport (many of those keen to pay obeisance do not possess passports), $ 20 fee and checking, the number of individuals crossing over is estimated at 250-500 which is far below the target of 5,000. This has been a disappointment for devotees keen to pay obeisance, and also hit certain businesses – especially hoteliers from Gurdaspur (Dera Baba Nanak is located in Gurdaspur district). 

In conclusion, the resumption of trade as well as greater people-to-people contacts are viewed from a zero-sum prism. It is important to bear in mind that the hostilities between both countries have impacted ordinary citizens in both countries, and the Panjab (India) which is landlocked has been impacted the most. As we commemorate 75 years of Independence and Partition, it is important to reiterate the fact that partition has had an indelible impact on the culture, politics as well as economy of the Punjab. In recent years there has been a yearning in Panjab (India) to rekindle strong economic and cultural linkages with Punjab (Pakistan), but politics has prevented the same. Hopefully, with pressure from business lobbies and civil society, policy makers in India and Pakistan will be compelled to resume trade via the Wagah-Attari land-crossing,  and also strengthen people to people linkages between both countries.

Tridivesh Singh Maini is Assistant Professor, Jindal School of International Affairs, OP Jindal Global University, Sonepat, Haryana.

Image credits – Tribune India

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