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The paper also takes a peek at examples in history where such similar conflicts have been settled using trade ties, beneficial to both the warring nations. What is of immediate urgency is for both the countries to realize that they would gain enormously if they lifted their sights beyond narrow vested interests and started to focus, instead, on the economic future of India and Pakistan.
Bilateral Trade - Where it Stands Today
As it stands today, direct trade between India and Pakistan is worth only about $300 million a year - a fraction of their combined $200 billion trade with rest of the world. Trade through third countries is, however, estimated to be 10 times higher than direct trade. In addition, illicit trade via smuggling, etc. forms a huge $1-2 billion worth of trade between the two countries. Analysts however, say there is immense potential for more direct trade as the countries make cautious progress towards peace.
According to government statistics, India's exports to Pakistan swelled by a record 328 percent in April-July'04 to $167 million from $39 million in the same period a year ago. At that pace, bilateral trade may surpass $500 million in the financial year ending March 31. This definitely opens some windows for deliberation.
Consider the following table.
Table 1: India Pakistan Trade 1990-2000 (max and min range, in %)
| Share of India's total Exports, 1990-2000 |
to South Asia: 2.7 - 5.1 |
| |
to Pakistan: 0.2 - 0.4 |
| Share of India's total Imports, 1990-2000 |
from South Asia: 0.4 - 0.8 |
| |
from Pakistan: 0.2 - 0.6 |
| Share of Pakistan's total Exports, 1990-2000 |
to South Asia: 2.6 - 4.9 |
| |
to India: 0.4 - 2.4 |
| Share of Pakistan's total Imports, 1990-2000 |
from South Asia: 0.4 - 1.7 |
| |
from India: 0.2 - 0.6 |
Source: Chadha, Rajesh and Devender Pratap, 'New Era of India-Pakistan Trade Relations: More Butter and Less Guns', unpublished mimeograph, New Delhi, 2003.
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* Contributed by -
Srinath Raj Kasi & Ashvin Vaidyanathan,
PGDIM - XI,
NITIE, Mumbai.
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