India and Pakistan used to be one nation governed by the British Empire until 15th August 1947, when they were divided into two different countries. From the day of independence the seeds of conflict were sown and these countries have since always been in a state of cold war for almost 50 years.
Both the countries are strategically important as they connect the central Asian states to the warm waters of the Arabian Sea, the hub of world trade routes.
The trade between India and Pakistan have been always in business during war and peace, either legally or illegally.
History of India and Pakistan Trade
India was a close trade partner of Pakistan for almost 20 years after partition. Export and imports included rice, grains, jute, cotton, spices, dry fruits, coal, iron and finished consumer products. In most cases the Indian share was larger than that of Pakistan. But after 1960 Indian percentage declined due to the on going Kashmir conflict, which soured the trade relations to an extent where there was no legal trade between India and Pakistan during 1965-1974.
In the present scenario of trade restriction official trade between India and Pakistan is around US$ 343 million compared to the unofficial trade from third countries and smuggling is estimated around US$ 2 ¡V 8 billion. (Muthiah) Combined trade of both countries with rest of the world is around US$ 200 billion.
Even though the countries are close enough and are the members of South Asian Association of Regional Cooperation (SAARC), they do not have any trade ties, but both countries are having free trade ties with neighbouring Sri Lanka.
Looking at the period of 2000-2001 and 2001-2002 in Table ¡V1 and Table ¡V 2, Pakistan imports from India were mainly agriculture related, 53% in 2000-01 and 16% in 2001-02 and chemicals, 21% in 2000-01 and 38% in 2001-02. While Indian imports from Pakistan were primarily agriculture and food related 66% for both the periods.
If we look at
References: Ashish, V., 2001. Business Lines, 2001. Available from: http://www.thehindubusinessline.com/businessline/2001/07/11/stories/041155ma.htm [Accessed 22 January 2006]. BBC, 2005. India-Pakistan trade talks begin [online]. Available from: http://news.bbc.co.uk/2/hi/south_asia/4286539.stm [Accessed 22 January 2006]. *(Dr A C Muthiah, President, FICCI) Bilaterals, 2006. SAFTA [online]. Available from: http://www.bilaterals.org/rubrique.php3?id_rubrique=85 [Accessed 22 January 2006]. CIA, 2005.World Fact Book [online]. Available from: http://www.cia.gov/cia/publications/factbook/rankorder/2067rank.html [Accessed 25 January 2006] *http://hdr.undp.org {Mr. Ilyas Ahmed Bilour ¡V President, India -Pakistan CCI (Chamber of Commerce & Industry)}