Islamabad’s decision to suspend trade with New Delhi will hit Pakistan not India due to latter’s low dependence on exports to its neighbour, officials and traders have said.
In a new low in bilateral trade relations, Pakistan Prime Minister Imran Khan on Wednesday decided to suspend trade relations with India in a five-point plan, in response to India’s move to end special status for Jammu & Kashmir and split it into two union territories.
India had revoked Pakistan’s most-favoured nation (MFN) status following the Pulwama terrorist attack that killed about 40 Central Reserve Police Force (CRPF) personnel in February this year and imposed up to 200% duty on import of Pakistani goods.
“Trade was practically closed for sometime. So, there will be no impact especially on agricultural products,” said an official.
In the first quarter of FY20, India’s exports to Pakistan were $452.5 million and imports were $7.13 million. In FY19, total exports to Pakistan were $2.06 billion, while imports were $495 million.
“The suspension of trade relations will hit Pakistan more as our exports to them have a very limited profile because they did not give us MFN status and violated global trade rules,” said Ajay Sahai, director general, Federation of Indian Export Organisations.
India’s major items of export are organic chemicals, cotton, plastics and dyes, while imports are fruit and edible nuts, and mineral fuels. Export of tomatoes to Pakistan had stopped long ago.
Sahai explained that such goods have a ready market in South Asia and Middle East which will enable India to divert such exports immediately without much cost.
“This is a unilateral move and a unilateral loss,” said Mohit Singla, chairman, Trade Promotion Council of India.
A Delhi-based exporter said that trade through Dubai remains open.
However, Sahai added that shipments in the pipeline will take a hit and it is not clear whether the goods in transit or lying at the ports would be recalled in such a deteriorating situation.