How trade with India may prove ‘cost-effective’

Sources say Pakistan could save foreign exchange by allowing direct import with lesser cost than sourcing through a third country, such as the UAE.


August 31, 2022

ISLAMABAD – With the devastating monsoon hitting all crops, the government’s proposal to allow import of vegetables from India via Wagah seems to have been necessitated by the destruction of onion and tomato crops, among others, in Sindh, Khyber Pakhtunkhwa and Balochistan.

This has, obviously, driven the prices of perishable products in the domestic market to their highest-ever levels. Tomatoes are mainly produced in KP, while onions come from Sindh and Balochistan.

The sowing of the second crop of tomatoes and onions was about to start in Sindh and Balochistan, an official source in the Ministry of Food Security told Dawn.

However, this will now be further delayed, while the standing crop from the first sowing has been damaged. It is worth noting that between April and June, the supply of tomatoes and onions comes from Punjab.

Well-placed sources told Dawn the government had allowed the import of tomatoes and onions from Afghanistan and Iran to meet a shortage in the domestic market. Imports from Iran is allowed for Balochistan, they further said.

According to the sources, Indian-origin vegetables could also be sourced from Dubai to improve the supply situation in the domestic market in case Islamabad did not allow direct trade from India.

Pakistan had banned imports and exports from India on Aug 9, 2019. However, through two notifications on Sept 2, 2019 it allowed the import and export of pharmaceutical products to and from India.

On the contrary, India exports pharmaceutical products to Pakistan directly, while it imports all types of products from Pakistan.

According to the Pakistan Bureau of Statistics, Indian exports to Pakistan stood at $0.0021m between July and March 2021-22 against $0.0662m over the previous year. The Indian exports included all crude minerals, medical and surgical instruments.

The Indian imports from Pakistan stood at $281.33m in July-March 2021-22 against $237.26m over the last year. India imports medical and pharmaceutical products and chemical products in bulk from Pakistan. However, there are other products also that India imported in small quantities.

The trade with India gained a negative momentum in 2020-21 when its exports to Pakistan fell to $0.078m from $8.04m in 2019-20. However, Indian imports from Pakistan stood at $317.35m in 2020-21 from $380.09m over the previous year. Contrary to this, Pakistani importers used third countries — Dubai and others — to import products of Indian origin.

Chandigarh-based journalist and blogger Chanchal M S Bedi told Dawn via WhatsApp that Pakistani importers trade with India via Dubai. He said the retail price of onion in Chandigarh near the Wagah border was Rs69 per kilogramme in the Pakistani currency, while tomatoes were available at Rs83 per kg and potatoes Rs69 per kg.

Mr Chanchal further said these prices would be much lower in case of bulk purchase for export. He said these crops were in abundance this season and could easily be exported to Pakistan through the Wagah border.

The UAE has emerged as one of the largest trade partners of Pakistan. Their total bilateral trade reached $10bn during 2021-22. Pakistan’s exports to the UAE amounted to $1.36bn and imports from the UAE stood at $8.66bn. This depicts Pakistan’s sourcing of Indian goods via Dubai.

According to the source, Pakistan could save foreign exchange by allowing direct import with lesser cost than sourcing through a third country, which increased the cost. He said the direct import of vegetables through Wagah would be cost-effective to help improve supply in the domestic market.

In March 2021, the Economic Coordination Committee announced it would allow the private sector to import 0.5 million tonnes of white sugar from India and cotton via Wagah border. However, the decision was reversed within days following severe criticism from the then opposition parties — the PML-N and PPP.

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