Trade between India and Pakistan may not be affected substantially as a result of the political tension between the two countries following the Uri attack, unless New Delhi decides to impose a complete ban.
However, such a situation has not arisen in the recent past, not even after the attack on the Indian Parliament in December 2001, when only partial sanctions were imposed and trade was banned through the air and land routes, while it continued through the sea-route, a Commerce Ministry official told BusinessLine .
“The decision on whether to leave bilateral trade untouched or impose a partial or complete ban lies with the Prime Minister’s Office and the Ministry of External Affairs. But, experience shows that a complete ban would be an extreme decision,” the official said.
The recent violence in Uri and the killing of Indian soldiers, however, will prove to be a further dampener for the bilateral trade liberalisation process, which started in January 2011, but has been in limbo since early 2013 following violence at the Line of Control in Kashmir.
Pakistan had brought down the number of banned Indian goods to 1,209 items from about 6,000 while India has reduced duties sharply on a number of Pakistani products. Trade experts say that putting a complete ban on trade would not be a judicious decision as the balance of trade is heavily in India’s favour. “Any ban on trade will adversely affect the Indian industry more than the Pakistan as the country exports much more than it imports,” pointed out Nisha Taneja from ICRIER.
India’s exports to Pakistan were valued at $2.17 billion in 2015-16 while its imports from the country were a little less than $500 million. According to Taneja, political tension had not resulted in a dip in bilateral trade either after the Parliament attack in December 2001 or after the Mumbai terrorist attack in 2008. “In fact, trade between India and Pakistan steadily increased (after a slight dip in 2002) in the entire period the partial sanctions continued. After the Mumbai attacks, too, trade expanded as Pakistan increased the number of items on its positive list,” Taneja said.