Pakistan-India Trade:

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
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