Pakistan-India Trade:

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What Can India and Pakistan Do To Maximize the Benefits from Trade? trade in goods, services, ideas, capital, and the movement of people— and thereby increase regional growth by one to two percentage points (Ahmed, Kelegama, and Ghani 2010). Improving trade logistics is not enough. Transport and connectivity also need to be improved. India and Pakistan cannot trade much due to poor and restricted transport. India and Pakistan have a 3,323-kilometer land border that demarcates the Indian states of Punjab, Rajasthan, and Gujarat from the Pakistani provinces of Punjab and Sindh. However, Table 1: Trade/Transport links Between india and Pakistan are Weak sector route Road transportation (passenger bus services) Rail transportation (passenger train services) Delhi-Lahore Amritsar-Nankana Sahib Amritsar-Lahore Poonch-Rawalkot Srinagar-Muzaffarabad Delhi-Lahore Jodhpur-Karachi Shipping links Mumbai-Karachi Air links Gas pipeline TAPI* Delhi-Lahore Mumbai-Karachi Electricity links Amritsar-Lahore* Border (land) customs for trade Note: *=Proposed /to be operational Wagah-Attari Poonch-Rawalkot Srinagar-Muzaffarabad Munabao-Khokhrapar* | 101 |
Kalpana Kochhar and Ejaz Ghani this immense frontier has few trade transportation links (see Table 1). In addition to the Attari-Wagah border, which is the major road and rail crossing between India and Pakistan, three more land routes (Muzaffarabad-Srinagar, Poonch-Rawalkot, and the not-yet-operational Khokrapar-Munabao) have been used for trade between the two countries. India and Pakistan have only one direct sea route (Mumbai- Karachi) and two air routes (Delhi-Lahore and Mumbai-Karachi). Restrictions imposed by the two countries on trade along the border have led to the opening of many indirect (and informal) trade routes, some of which act as major trade axis. Mumbai-Dubai-Karachi and Mumbai- Dubai-Bandar Abbas-Afghanistan-Pakistan are the prominent ones. Regional transport is not well developed for most countries in South Asia. Road network quality is low, with few regional linkages, while rail networks between ports and markets are often missing, thereby putting unnecessary burdens on already-inadequate road networks. Only a limited number of items are allowed to be transported via rail/road, there are specific timings for the opening of these routes, and in most cases there are no proper warehousing/storage facilities available. Information flows on trade-related matters are particularly weak, thereby generating enormous problems for exporters and importers. Since banks are not allowed to open branches across the border, this leads to significant delays, especially when letters of credit need to be confirmed, which can take up to a month. There are no institutions or regional mechanisms for addressing trade disputes or grievances. It is therefore not surprising that the cost of trading in South Asia is among the highest in the world—even higher than in Africa. Indeed, several South Asian countries are ranked lower than Sub-Saharan Africa on the Logistics Performance Index by the World Bank. 2 For example, crossings between India and Bangladesh are so heavily congested that queues often exceed 1,000 trucks on the Indian side, with the result that crossing times can take 99 hours (compared to 21 hours in the absence of delays). Two hundred signatures are needed before Nepal can trade goods with India. India and Pakistan do not extend freedom of transit to each other or to international traffic in transit. Transit of Pakistani goods through India to Bangladesh and Nepal is prohibited. Pakistan places restrictions on transit trade from India to Afghanistan. Additionally, testing laboratories for trade between India and Pakistan in agriculture, processed | 102 |
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