Why Pakistan and India must increase bilateral trade

Published: September 2, 2011

Increased trade will drive up production in Pakistan

Since 2008, Pakistan has been experiencing the lowest average GDP growth of all South Asian countries, at 3%. Few will disagree that this is perhaps among the biggest challenges that Pakistan is facing at present.

China and our arch-rival India are both booming, both experiencing over 8% GDP growth for the past few years. It should be borne in mind that both countries have been rivals themselves and had a border dispute many years ago that erupted into a war. However, both have realised the mutual benefits of trading with one another and whatever disputes they may have had are put on the backburner for good.

As for Pakistan, it faces serious challenges such as terrorism and an acute power crisis with seemingly no solution. It desperately needs to speed up its trade relations with all of its neighbours and this of course includes Afghanistan and India.

The Pakistan Business Council (PBC) has repeatedly urged the federal government to take measures that explore the massive potential of trade between Pakistan and India. The argument is quite simple and straightforward: increased trade will drive up production in Pakistan since rising exports would mean that local output meant for export would have to increase. And this in turn would cause a much-needed rise in employment.

The council represents 35 of Pakistan’s leading national and multinational companies and says that the country’s GDP growth rate could increase by 1-2 percentage points if trade relations with India were to improve. In addition to this, the international community, by and large, would also want trade ties between the two neighbours to improve. However, one forgets that the international community is seen by many in this country as not being among Pakistan’s well-wishers.

Regardless of what Pakistani public opinion may say about the international community, the facts speak for themselves. When arch-rivals China and India can boost their trade ties, why cannot Pakistan and India do the same? Today, the world recognises China and India as the economic powers of not only Asia but of the whole world.

Analysts say that it is untrue that the manufacturing sector in Pakistan will become uncompetitive once the Indian markets open up. They say when Pakistani goods can compete with Indian ones in the international markets they can do so also domestically.

Farhan Zaheer

Farhan Zaheer

A reporter on the business desk of The Express Tribune.

The views expressed by the writer and the reader comments do not necessarily reflect the views and policies of The Express Tribune.