How to encourage India-Pakistan trade

Every evening before sunset, with great pomp and nationalism, Indian and Pakistani guards participate in a flag-lowering ceremony at Wagah border, about 400 km north-west of New Delhi. Citizens on both sides cheer as guards conduct their choreographed routine, swiftly marching and high-kicking. Tourists on both sides take turns to hold their national flags and run a 100 metre distance towards the border gates, shouting patriotic slogans. Once they reach the gates, looking a bit confused, they turn around and run back to the starting point.

India and Pakistan’s trade efforts have resembled such runs. Indian and Pakistani businessmen run towards each other, hoping that the gates will open for more trade. But when they reach the border, the political dynamics of both countries keep the gates almost closed.

Over the past 60 years, the two neighbours have gone to war thrice and have been in a state of constant strife over border and security issues. The Wagah border checkpoint has been a symbol of every problem dividing the two countries. Now, however, Wagah is a symbol of a growing business relationship: more of a trading post than a military outpost. Over the past few decades, trade between the two countries has risen to about $2.7 billion dollars. But trade worth three times as much takes place, through other countries like Singapore, since distrust and fear have kept up high barriers to business. It’s a bit like Germany and France trading with each other, but shipping via Turkey.

Trade links between India and Pakistan are gathering momentum as the potential of wealth creation is overcoming security fears. Since last November, the two countries have agreed to reduce barriers to business and to ease visa restrictions. The Pakistani Cabinet has decided to offer the Most Favoured Nation status to India, which will allow lower tariffs on more products. India responded rapidly by holding a rare trade show in Lahore in February. With India seeking imports and business partnerships with Pakistan, direct trade between the two is projected to grow to $10 billion in three years.

Business bodies are pitching in as well. The All India Management Association and the Management Association of Pakistan have agreed to exchange knowledge on management development. Although Indian and Pakistani corporations are set to engage like never before, there is some way to go yet. True maturity will be evident only when companies employ local workers and managers in each other’s countries.

Such steps are finding support from global organizations like the World Economic Forum. The regional councils of Pakistan and India at the Forum have been working to add pace to the business momentum. Over several joint meetings since last year, the councils have decided to facilitate internship exchange programme, work with governments to liberalize business visas and support trade friendly regulation.

The time is right to trade in hope and to invest in a common future.

Pictured: A Pakistani Ranger (R) and an Indian Border Security Force (BSF) officer shake hands during the daily parade at the Pakistan-India joint check-post at Wagah border, on the outskirts of Lahore October 23, 2011. Pakistan released an Indian army helicopter just hours after it strayed across the tense border between the two countries on Sunday, officials said, underscoring a desire by the old rivals to avoid any crisis as they try to improve ties. REUTERS/Mohsin Raza

*Pranjal Sharma is Consulting Editor for BusinessWorld magazine and Vice-Chair of the Global Agenda Council on India.