Pakistan lifts ban on Indian Exports

Pakistan has decided to lift its ban of Cotton and Sugar imports from India. India –Pakistan trade was always impacted by its political relations. Indian goods exports to Pakistan fell by 16% in 2016-17 in comparison to 2015-16 because of Uri attack and the Indian Army’s surgical strikes on militant launch pads in Pakistan-occupied Kashmir in 2016.

The trade between two countries grew marginally because of continuous tension. Indian exports hardly rose to 6% in 2017-18 and then to around 7% in 2018-19. However Indian imports are very less in volume from Pakistan but that showed slight increase of 7.5% in 2017-18 in comparison to 2016-17. Around 1% increase in import to Pakistan was seen in 2019.

India has trade surplus with Pakistan. Pakistan was among India’s top 50 trade partners in 2018-19, but was removed from the list in 2019-20. It had been expected that a trade ban between both the countries would impact Pakistan more, because it depended heavily on India for major raw materials for its textiles and pharmaceuticals industries.

In 2018-19, cotton and organic chemicals accounted for around half of Pakistan’s imports from India. Other major products that were imported to Pakistan from India that year included plastic, tanning/dyeing extracts, and nuclear reactors, boilers, machinery, and mechanical appliances.

After the ban, imports fell drastically to $1 million to $2 million between April 2020 and January 2021, while cotton imports stopped completely. The only increase was seen in pharmaceutical products to ensure sufficient supplies of medicines during the COVID-19 pandemic.

India’s major imports from Pakistan in 2018-19 were mineral fuels and oils, edible fruits and nut, salt, sulphur, stone and plastering materials, ores, slag and ash and raw hides and leather.

India imported these products in higher volumes from other countries such as Saudi Arabia, US, UAE, Chile and Italy.

Reason for trade ban

The constitutional changes made in Jammu and Kashmir by revoking article 370 was said to be the fall out of Pakistan. However, the primary reason for freezing trade was the 200 per cent tariff thrust by New Delhi on Pakistani imports earlier that year after India quashed Pakistan’s Most Favoured Nation (MFN) status as a consequence of the Pulwama terrorist attack. Trade between both the nations suffered greatly.

Reason for lifting the ban

The Pakistani decision to lift the ban on cotton imports comes because of a shortage in raw material for Pakistan’s textile sector. Textile industry has suffered due to low domestic yields of cotton and also, imports from countries like the US and Brazil are costlier and take much time to arrive.

The decision on lifting ban on sugar was dominated by high domestic prices. The increase in imports of sugar was an initiative “to stabilize the market prices”. Sugar prices are low in India than in Pakistan.
It is expected that by lifting the ban, trade will re-open between India and Pakistan.