Pak-Indo Relationship – Ray of hope to restore economic ties – Experts

The news regarding the efforts of UAE for the mediation between the Pakistan and India is the talk of the town. After Pakistan and India had recommitted themselves to the 2003 ceasefire arrangement at the Line of Control and agreed to address the “core issues” that could undermine peace and stability during February’2021.

• The current visit of UAE Foreign Minister Sheikh Abdullah bin Zayed and meeting with Indian counterpart Subrahmanyam Jaishankar focused on the regional and international issues of common interest and exchanged views on them.

• The one bold step expands to a series of small steps, which may together set the stage towards permanent peace. Both PM Imran Khan and Army Chief have reiterated their interest in peacemaking, indicating strong coordination between the military and the government, which may help strengthen ties between the two countries.

• To strengthen the relationship further, the Pakistani delegation will visit India for a meeting of the permanent Indus River commission after two and a half years.

• India and China’s top diplomats meeting to discuss plans to disengage troops from their Himalayan border purse regional cooperation.

• The Biden administration welcomed the announcement on re-implementing the 2003 ceasefire agreement, which it had advocated. The US wove to play its role and continue to support direct dialogue between India and Pakistan on Kashmir and other issues of concern.

• In the light of these media reports, the expected peace talk between the two nuclear rivals Pakistan and India will lead towards regional political and economic stability. The next step in the process involves both sides reinstating envoys in New Delhi and Islamabad.

From geopolitics to geo-economics

• After mutual understanding between the two countries to hold peace along the LoC, the resuming of trade at Wagah would be the next step we believe that trade plays the yielding and cheerful role in the peace process.

• Like other trading partners to put geo-economics above geopolitics may become a new desire for both countries.

Increased trade will benefit each country’s economy, build cooperative bilateral relations and open the door to progress on core political and security issues.

• The major import of raw material from India includes cotton, chemicals, plastic, steel, and food while cement would be the major export items.

• The trade between Pakistan and India was restricted since Aug’19. Total exports during 2005-2010 were USD 1.6bn, while imports clocked in at USD 5.9bn during the same period, reflecting a trade deficit of USD 4.3bn.

• This trade came to a grinding halt after the imposition of 200% custom duty by India on all imports from Pakistan with effect from 16 February 2019. It came to a complete halt on 9 August 2019 when Pakistan imposed a complete trade embargo on its trade with India.

• During the last peace talk in 2004, the two countries launched a new integrated checkpoint at the Attari-Wagah land border crossing, India permitted FDI from Pakistan, removed a ban on Pakistani businesses setting up operations inside India, a visa agreement that loosens travel restrictions, Pakistan installed additional scanners and weighbridges at Attari-Wagah border.

• The start of talks between the two countries could spark a rally in the Stock Market as it immensely impacts market sentiments.

• The cement industry has halted export to India after the Pulwama attack and 200% increase in import duty. Pakistan’s annual cement export to India hovered between $70-80 million. The ~75% cement exports to India were sent via the Wagah border while the rest by the sea route. Exports to India stood at 1.212m tonnes in 2017-2018. Historically, cement exports to India began in 2007-08 with the shipment of 787k tonnes and since then continued to rise.

Pakistan’s highest ever exports of cement were 1.25mn tones in 2016-17.

Courtesy – Spectrum Securities Limited

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