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May 26, 2019
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Pakistan imports from India fall considerably

KARACHI: As Pakistan trade with India has come to a standstill following the Pulwama attack, Pakistan is faced with numerous opportunities as well as challenges for Pakistan.

According to an article in The Express Tribune, Pakistan’s imports from India have fallen considerably. Following the Pulwama attack, India retracted the most favoured nation (MFN) status awarded to Pakistan, imposed additional tariffs on goods imported from Pakistan, cancelled export orders from Pakistan and banned the export of certain products to Pakistan such as tomatoes.

The article while quoting data extracted from Trademap.org said that Pakistan exported $335 million of goods to India in 2017, which was approximately 1.5% of total exports from Pakistan. The range of products exported was limited, mostly comprising cement, gypsum and dried dates.

Pakistan exported $90 million worth of fresh or dried dates, $65 million of Portland cement, $14.4 million of medium oils and preparations, $13.9 million of gypsum and $13.6 million of tanned leather. Pakistan is by far the largest source of Portland cement and fresh or dried dates into India. Pakistan is also one of the leading exporters of Portland cement and dried dates around the world. In essence, exports from Pakistan to India are limited to a few products in which Pakistan has relative advantage in the global market.

Furthermore, cement and dates contributed only 1.4% of total exports from Pakistan to all its trading partners in 2017. On the other hand, out of $1.7 billion of goods imported by Pakistan from India in 2017, $555 million was paid for chemicals or allied products, $203 million for raw cotton, $141 million for cotton yarn and $68 million for polymers of propylene in primary form. In essence, India supplied mainly raw material and intermediate goods to Pakistan.

Pakistan reduced imports of vegetables from India in 2017. For instance, it imported more than $100 million worth of fresh or chilled tomatoes from India in 2016, approximately 86% of total import of the commodity from all partners. However, in 2017, it stopped the import of tomatoes.

Similarly, more than 50% of the total raw cotton imported into Pakistan was sourced from India in 2014 and 2015. In 2017, the share of Indian raw cotton fell below 27%.

The United States replaced India as the largest source of raw cotton as $279 million worth of the commodity was imported from it. This is primarily due to the resurgence of the US as a significant exporter of raw cotton globally.

Furthermore, Saudi Arabia has been a major source of polymers of propylene. In essence, Pakistan has shifted away from Indian imports, replacing it with other sources.

According to the World Bank’s “Glass Half Full: The Promise of Regional Trade in South Asia”, trade potential between Pakistan and India is estimated at $37 billion. Uncertainties in the relationship between the two countries not only impede trade but have rather led to trade diversion in recent years.

Considering the recent economic opportunities and challenges, Pakistan must further strengthen its trading relationship with important trading partners by pursuing trade and investment agreements. It must take full advantage of the renewed geopolitical and economic interests.