View: Pak wants to renew trade ties with India. What should Modi govt do?

Pakistan’s foreign minister Ishaq Dar on March 23 said that his country was considering renewing trade ties with India.

Why did he make the statement?

The answer lies in the simple fact that trade with Pakistan from the Indian side still continues through third parties, i.e Dubai, Singapore and other ports. In the current year itself, India has exported nearly $1.10 billion worth of goods that includes petroleum products, sugar and pharmaceuticals to Pakistan. The imports from Pakistan are negligible.

Two years ago, Pakistan lifted the sanction on import of life saving drugs from India. Currently, that is the only direct trade that takes place and that too because India believes in humanitarian assistance to any neighbourhood country.

Pakistan decided to downgrade ties with India and cut all trade ties after New Delhi abrogated Article 370 and Article 35(A) on Jammu and Kashmir. India removed the ‘Most Favoured Nation’ status granted to Pakistan after Pak-based terrorist group Jaish-e-Mohammed struck in Pulwama on February 14, 2019, killing 40 Central Reserve Police Force (CRPF) personnel in a suicide bomb attack.

What is interesting is that on the day Ishaq Dar made the statement, Pakistan prime minister Shehbaz Sharif reiterated that India and Pakistan can only move forward after sorting out the issue of J&K. His statement was reflected by the statement and tweets of a junior diplomat based in India who said that India and Pakistan needed to sort out all outstanding bilateral issues including J&K.

As far as India is concerned, the only issue it has with Pakistan is terrorism as there is no issue of J&K whose status is finally settled for good.

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India has exported nearly $1.10 billion worth of goods that includes petroleum products, sugar and pharmaceuticals to Pakistan

Why is Pakistan wanting to do trade with India?

There is a lot of pressure from the Pakistani business community to do trade as they are paying extra duties while getting imports from India via third countries. Pakistan’s economy is in dire straits and the external debts and liabilities have almost doubled to $125 billion.

Its domestic debt has increased sixfolds in nominal terms since 2011. For financial year 2024, Pakistan faces an estimated debt maturity of $49.5 billion with 30 per cent as interest payments.

Pakistan has mere $8 billion in foreign currency reserves. It battles 33 per cent inflation while the US dollar-Pak rupee exchange rate is touching the triple century mark. Pakistan is running for economic cover from the IMF.

Under the circumstances, there is no better way for Pakistan to cut down its losses and then tell the world that it has come down from its high horse and is willing to resume trade ties with India. But the problem is that Pakistan does not speak in one language, and this was evident in the statement made by Shehbaz Sharif who wanted to move a joint resolution on Kashmir and Palestine on March 3 in the National Assembly.

Till such time, the Pakistan Army which runs the country, comes out clearly whether it wants to have trade ties with India or not, all this is a matter of public speculation.

What should India do now?

When Pakistan says it wants to resume trade ties with India while wanting the J&K issue to be settled, this line does not hold good for New Delhi. India wants bilateral ties with Pakistan only after terrorism issue is settled and Islamabad takes action against anti-India terror groups like Jaish-e-Mohammad and Lashkar-e-Toiba that are based in the neighbouring country.

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