Trade ties with India

April 08, 2014


Sir: At the moment, Pakistan seems obsessed with the idea of promoting a liberalised trade regime with India, ignoring altogether its own economic compulsions and domestic needs. Reciprocating the Indian policy, Pakistan is all set to grant Most Favoured Nation (MFN) status — now NDMA status — to India.

At present, India obviously has a sort of comparative advantage and edge over Pakistan. Both its agriculture and manufacturing sectors are more efficient and competitive than those of Pakistan. Moreover, the Indian economy is one of the most subsidised economies in the world. It gives heavy subsidies to its farmers in the form of cheap electricity, fertilizers and other inputs so as to enhance agricultural output. Likewise, India ranks second in farm output and is the largest producer of fresh vegetables and fruits worldwide. At the same time, it also has the highest food spoilage rate in the world due to poor cold storage, food processing and packaging facilities. So, it direly needs a big consumer market in the region for its surplus agricultural produce.

On the other hand, Pakistan’s economy is currently in a state of ‘stagflation’, characterised by a stagnant economic growth coupled with high inflationary pressures. It is struggling for its very survival against the odds in the form of a severe energy crisis, terrorism, public sector corruption and deteriorating law and order situation in the country. Economic mismanagement by the government is at its peak. The textile sector used to be the major exporter and foreign exchange earner for the country due to its efficiency and competitiveness in the world. It is no longer so due to the economic mismanagement and negligence on the part of the government.

In such a state of affairs, Pakistan needs to adopt some protectionist policies to save and develop its domestic economy instead of harming itself by liberalising trade with India. Instead of bilateral trade with India, Pakistan should strive for the promotion of regional trade among the South Asian Association for Regional Cooperation (SAARC) member countries in line with the South Asian Free Trade Agreement signed by member states in 2004. For this, SAARC member countries should make collective endeavours in reaching pragmatic and common points for the promotion of regional trade.

Mohsin Raza Malik

Courtesy Daily Times

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