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From the above table, a few stark observations can be made. Firstly, open formal (legal) trade between the two countries constitutes a very small chunk of total trade and in the last decade has varied between a low of US$ 106 million in 1994-95 which was a mere 0.6 percent of Pakistan's total trade that year, to a high of US$ 321 million in 1998-99 or 1.9 percent of Pakistan's total trade.
Clearly the volume and scale of trade between the two countries is very small in absolute terms and as a percentage of the total trade of both countries. It is believed that third-country trade and smuggling increase the volume of trade from anywhere between US$ 1-2 billion, still a small number, but of somewhat more significance, particularly for Pakistan's smaller economy.

In recent years, as imports from India ranged from US$ 145 million in 1998-99 to US$ 235 million in 2000-01 and to US$ 187 million in 2001-02, India has emerged as Pakistan's 16th biggest trading partner in terms of imports. This figure is more interesting since the four largest importers into Pakistan are oil-exporting countries (Saudi Arabia, UAE and Kuwait) and Malaysia which exports mainly palm oil to Pakistan. Despite hostilities, wars and diplomatic breakdown, Pakistan imports (based only on official figures, which perhaps are a third of the actual volume) more from India than it does from France, Canada, Switzerland, the Netherlands, Turkey, Iran or even Thailand, which is most interesting given the strained political relations between the two countries.

Consider the following tables: -

Table 3: Year-wise Balance of Trade of Pakistan with India (1996-97 to 2000-01)

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* Contributed by -
Srinath Raj Kasi & Ashvin Vaidyanathan,
PGDIM - XI,
NITIE, Mumbai.