India - Pakistan Trade Relations | Where is Both Countries

India Pakistan trade relations despite the obstructive behaviour of Pakistan to allow a trade to materialise, the two sides have tremendous potential for bilateral trade. 

History of India Pakistan Trade

In 1996, India gave the MFN status to Pakistan, which is reciprocated in 2012 The bilateral trade is around 2.5 USD billion despite a potential of 20 USD billion. It is imperative for the two to explore cooperation in trade and establish a regional value chain in the globalised and integrated world. 

Some experts have suggested that the two can explore product-specific regional value chains in sectors like textiles, sports goods and surgical instruments.

Trade Condition

For instance, in Surat (GJ) and Tiruppur (TN), there in Lahore and Faisalabad. Similarly, in India, there is a huge demand of Pakistani salwar kameez and production of raw materials of textiles that can be linked to production centres wedding attire, which can be explored as a sector. 

Similarly, Pakistan is gradually emerging as a global Supplier of sports goods. Sialkot in Pakistan is a manufacturing hub for sports goods from football to gling gloves. The footballs manufactured here have been used in the FIFA World Cup also, However, the manufactures of these products in Sialkot need high-quality raw materials and semi-finished products, which at present they import from Thailand.

This is where India can step in India has high-quality latex, rubber and football bladders, which it can directly expertise Again, Sialkot is known for its in surgical instruments and is a global supplier to the US and major powers in Europe. India is provide to Sialkot major importer of surgical instruments. At present, it imports them from developed states of the world at very high prices. A direct import from Sialkot is economically and logistically conducive for India. 

For instance, India can enhance the supply of stainless steel to Pakistan, which in turn will be a ready raw material available to manufacturers in Sialkot. Sialkot enjoys a historical edge because till 1947, Jalandhar and Stalkot were integrated manufacturing hubs. After the partition the skilled Labour moved to Sialkot. 

Way Forward

The hope of the trade is that it will help to create a constituency of peace, which will enable Pakistan to relinquish terror and Join the economic race. But, the ISI finds no merit in the argument of trade with India and is keen to skilfully use its geographical position to harm India. 

After the Pulwama attack in 2019, India has also hiked the duties for bilateral trade and withdrawn the MFN status with Pakistan. Thus, the politics have again taken over economics in the bilateral ties.

After the Smiling Budha

In 1980, reports were going on that Pakistan acquired nuclear capability. The United Nations General Assembly, launched a Special Session on Disarmament (SSOD) in order to achieve global disarmament The first SSOD meet happened in 1978 and reaffirmed the need for disarmament. At the end of fi SSOD, the General Assembly established a Disarmament Commission comprising all UN members second SSOD happened in 1982 but failed to establish consensus despite an urgent need for disarmament The third SSOD in 1988 also failed to establish a consensus.

Zulfikar Ali Bhutto, head of state of Pakistan, acquired Saudi Arabian financing for nuclear weapon. The most important reason for Pakistan's going nuclear was India's already having done so.Pakistan perceived its nuclear capability as a bargaining chip in the Kashmir in future. Indira Gandhi in the Parliament accepted Pakistan's right to go nuclear but maintained that India had an edge on all aspects' over India had four options at that time:

1.Do covert operation and blow up Pakistani reactors

2.Strengthen cooperation with the USSR to contain Pakistan

3.Put pressure on Pakistan through international community to halt its ambition.

4.India produces own weapon

Indira Gandhi adopted a wait and watch policy. Though reports do suggest that she planned to test nuclear weapon in 1982, when the US satellites captured images of the nuclear test preparations by India, the idea was immediately dropped.

 In 1983, India launched the Integrated Guided Missile Development Programme (IGMDP) to establish five guided missiles (Nag, Trishul, Akash, Prithvi and agni), After India tested Prithvi. In 1988 the MTCR was established.

Indus Water Treaty Issue

The major disputes is about the Wullar barrage or the Tulbul Navigation Project on the Jhelum in Kashmir. The dispute goes back to 1984. India wanted to establish a barrage at the mouth of he Wular Lake on Jhelum River. That the project entailed the creation of a 439 ft long and 40 ft wide barra which would store 0.30 million acre feet of water, which would make the river navigable during Summer season. Pakistan had taken the matter to Indus Water Commission (since 1986) as it alleged that the Wullar barrage violated the Indus Water Treaty of 1960, and the creation of the barrage would be used by India as a geostrategic weapon to restrict water supplies to Pakistan. India uses the term Tulbul Navigation Project, while Pakistan uses the term Wullar barrage to refer to the project. Since 1986, there have been negotiations between the two sides to resolve the dispute, but it still persists.

Let us turn our attention to the Indus Water Treaty. Before Partition, the water of Indus River, the Indus system, was jointly used by India and Pakistan. After the Partition in 1947, the two sides concluded an inter-dominion accord where it was decided that on annual payments from Pakistan, India would release a sufficient amount of water to Pakistan. It was decided in the inter-dominion accord that the two sides in future will negotiate a permanent solution, In 1951, the Former Chairman of Tennessee Valley Authority, David Lilienthal visited the region and recommended joint operation and development of Indus the then Chairman of World Bank, Eugene Black, basin. Based upon the idea propounded by Lilienthal, convinced India and Pakistan to negotiate a settlement for water sharing. The meetings began from 1954 and finally concluded in 1960 with the Indus Water Treaty (IWT) signed between Nehru and Ayub Khan. The Indus basin has three eastern flowing rivers (Sutlej, Beas and Ravi) and three western flowing rivers (Indus, Jhelum and Chenab). As per the INT 1960, India got control over the eastern rivers, while got control of western rivers. India, however, as per the IWT, was allowed to use the water from Pakistan the western rivers for the purpose of consumption with restricted use of the river water for storage. On was not to build storage and irrigation systems on the the western rivers, except for specific cases, India rivers. In the IWT, if there were to be a disagreement between India and Pakistan, there was a provision to seek mediation and arbitration. As per the Article XII of the IWT, a modification is permissible when both parties agree for the need of the same, To make sure that neither of the parties is violating any of the provisions of the IWT, the treaty provides for a Permanent Indus Commission (PIC) where there would be one commissioner appointed by India and one by Pakistan. Whenever a project is initiated by one party, it has to share the information with the other party. If there is ever a dispute, first there to be bilateral talks. If talks fail, the aggrieved party can seek third-party (neutral party) intervention Jhelum is a west flowing river, one of its tributaries in Kishanganga. The Kishanganga in Pakistan called Neelum river. India authorised the National Hydropower Corporation to establish a dam name Gurez on the Kishanganga River. To generate electricity, the National Hydropower Corporation envisaged the creation of a 20 km long tunnel to divert water. The water through the tunnel could be diverted through the tunnel to generate 300+ MW electricity at the Kishanganga Hydroelectric Plant (KHEP) in Bonar Nallah. Pakistan objected to the KHEP project alleging that the diversion of the water will reduce the availability of water Pakistan requires for the Neelum-Jhelum Hydropower Plant and thereby also reduce the original share of river water due to Pakistan under the IWT by 15 per cent. Thus, in 2010, Pakistan approached the International Court of Arbitration (ICA). The ICA gave a final decision in December 2013, As per the ICA, Pakistan will need at least 9 m/s water flow in the river which shall be maintained by India and India would be able to, after ensuring 9 m/s flow in the river, go ahead with the KHEP project.

Pakistan had also raised four design-related issues at the ICA, but out of the four, only one was settled, while the rest could not be settled at the bilateral level between the two. In June 2013, India initiated a new 850 hydropower station to be constructed as the Ratle plant on the Chenab River. Pakistan raised objection to the Ratle plant and took up the issue for arbitration by the court of arbitration at the World Bank. Pakistan, on 19 August 2013, requested the World Bank to constitute a court of arbitration. India, as per the IWT had to respond to the request on 19 October 2013. On 4 October 2013, India request that a neutral expert be appointed. If a state requests a neutral expert be appointed, then such a request has to be accepted immediately. The World Bank, however, chose to sit on India's request. 19 OctOBER dest. On 19 October 2013, when the Pakistani request matured, the World Bank advocated both the setting up of ac up of a court of arbitration and appointment of a neutral expert. India objected to the proposal, observing that it would complicate the process, India threatened that it may not participate in the court of arbitration as it had requested for a neutral expert's appointment which had to be accepted immediately, but it lately, but it was not The World Bank exercised a pause to the two processes and urged the two states to find an alternative resolution mechanism. The matter was taken up at the level of the Permanent Indus commission.After the Uri attack happened in September 2016, India decided not to hold the PICmeeting with Pakistan till it stop funding terrorist. However in March 2017, the suspension was lifted and possibility of agreement is awaiting in future.