India and Pakistan used to be one nation governed by the British Empire until 15th August 1947, when they were divided into two different countries. From the day of independence the seeds of conflict were sown and these countries have since always been in a state of cold war for almost 50 years.
Both the countries are strategically important as they connect the central Asian states to the warm waters of the Arabian Sea, the hub of world trade routes.
The trade between India and Pakistan have been always in business during war and peace, either legally or illegally.
History of India and Pakistan Trade
India was a close trade partner of Pakistan for almost 20 years after partition. Export and imports included rice, grains, jute, cotton, spices, dry fruits, coal, iron and finished consumer products. In most cases the Indian share was larger than that of Pakistan. But after 1960 Indian percentage declined due to the on going Kashmir conflict, which soured the trade relations to an extent where there was no legal trade between India and Pakistan during 1965-1974. In the present scenario of trade restriction official trade between India and Pakistan is around US$ 343 million compared to the unofficial trade from third countries and smuggling is estimated around US$ 2 ¡V 8 billion. (Muthiah) Combined trade of both countries with rest of the world is around US$ 200 billion. Even though the countries are close enough and are the members of South Asian Association of Regional Cooperation (SAARC), they do not have any trade ties, but both countries are having free trade ties with neighbouring Sri Lanka. Looking at the period of 2000-2001 and 2001-2002 in Table ¡V1 and Table ¡V 2, Pakistan imports from India were mainly agriculture related, 53% in 2000-01 and 16% in 2001-02 and chemicals, 21% in 2000-01 and 38% in 2001-02. While Indian imports from Pakistan were primarily agriculture and food related 66% for both the periods. If we look at the trade scenario between the countries, shown in Table-1 and Table-2, it is restricted mostly to food related products and chemicals. Both the countries were exporting very few raw industrial products. If we look at the Table-1 and Table-2 types of commodities imported by the India and Pakistan for the period of 2000-2002 are inconsistent. This shows that both countries, despite having had poor political and diplomatic relations, do turn to each other in times of need.
Table 1: Pakistan's Imports from India: 2000-02 (thousands of rupees)
Agriculture and Food
Iron and manganese ore
Tyres and Rubber
Note: Agriculture and food includes 'residue of soybeans oil-cake', and Chemicals includes dyes, paint and ink. Source: Federal Bureau of Statistics, Annual Trade Statistics 2000-02, Government of Pakistan, Islamabad, 2003. Table 2: Pakistan's Exports to India 2000-02 (in thousands of rupees)
Agriculture and Food
Cotton yarn and related
Source: Federal Bureau of Statistics, Annual Trade Statistics 2000-02, Government of Pakistan, Islamabad, 2003.
Peace as a catalyst for India and Pakistan trade
Even with so many conflicts around the world we see nations now opening the gates of trade in the economic interests of countries. In the present global situation, there are no real friends or enemies only the interests of a specific country come first.
Even China has opened its market to the west in order to improve its economy though the west is strongly against the political system in China.
Supporting the above scenario President of Pakistan, Gen. Pervez Musharraf expressed his...
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