The tension between these two neighboring countries has been intact for years now. Throughout the years, after the countries gained individual independence, the trade between them started to decline slowly. The trade further gained major setbacks mainly due to political differences and wars of 1965 and 1971. Notably, following the gruesome 2019 Pulwama attack, the Indian government took rigorous actions against their neighboring nation, which resulted in the revoking of Pakistan’s most favored nation trade status. This was granted to Pakistan in the year 1996.

Pakistan and the Indian trade

India also surged the custom duty to 200%, which affected the trade of Pakistani apparel and cement. Pakistan decides to launch an attack as well on the bilateral trade relations. Pakistan Prime Minister Imran Khan decided to suspend trade relations with India in a five-point plan. This was a repercussion to India’s move to end special status for Jammu & Kashmir and split it into two union territories.

Though both the countries have a tumultuous relationship which is pretty much evident in their trade deals, the recent status has been a little comforting. Pakistan is set to allow the import of cotton and sugar from India. This is a partial reversing of a two-year-old decision to suspend all trade with India. The decision to cancel trade was taken by the Pakistan government in August 2019, days after the Indian government amended Article 370 and reorganized Jammu and Kashmir.

An insight on Pakistan’s trade ban with India:

An insight into the trade relationship between India and Pakistan before the trade ban:

An account of the products traded between the two countries:

A dive into the exports made by India to Pakistan: 

Indian imports from Pakistan:

India’s major imports from Pakistan in 2018-19 areas listed below :

Trade analysts have explained that such goods have a ready market in South Asia and the Middle East, and a trade ban through Pakistan shall be of no such great harm. Also, this step shall enable India to divert such exports immediately without much cost. As famously quoted, the trade ban was termed as a unilateral loss contributed by a unilateral move.

Propelling factors that led Pakistan to choose to remove the trade ban :

There have been many contributing factors that let Pakistan finally remove its trade ban with India. Some of these reasons are short-listed below:

The country’s decision on sugar was driven by the high demands followed by the almost uncontrollable surge in the prices. They had to give in to import sugar from India to stabilize their skyrocketing market prices.

India provided the option for a cheaper import source. Cotton and sugar imports from distant countries like the USA and Brazil were deemed much costlier and time-consuming.

What can be expected after the trade ban lift? 

For both countries, the lifting of the trade ban can be a celebratory moment that can somehow help in mending broken relationships by some margin.

 

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