Border trade, collateral victim of Indo-Pakistani tensions

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ANKARA

Tensions between India and Pakistan, which resulted in the severing of trade ties, have affected 50,000 people directly in the Indian border town of Amritsar, according to a study by an Indian research and advisory organization.

The holy Sikh city of Amritsar in the northwest Indian state of Punjab, 28 kilometers (17 miles) from the border, loses 300 million rupees ($ 4.2 million) every month it earns due to Indo-Pakistani trade via Attari- Wagah border.

The losses recognized are collateral damage, not to mention the greater costs incurred by traders in cross-border trade, according to a study by the Bureau of Research on Industry and Economic Fundamentals (BRIEF).

After the Pulwama terrorist attack in Kashmir in February 2019 and the cross-border airstrikes, India withdrew most-favored nation (MFN) status from Pakistan, which in turn closed its airspace to Indian planes. Five months later, when India revoked Jammu and Kashmir’s autonomy and also divided the state, Pakistan ceased trading across borders.

A porter working at Attari told the research team that his life had been severely affected by the breakdown in trade relations between the two neighboring countries. Unable to pay the fees, he transferred his two children from a private English school to a public school. Two other children dropped out of high school.

“I had such a good life, thanks to trading. I was making 400 rupees ($ 6) per day. Now, the survival of my family of six has become difficult. I was forced to move two children to a public school. Two others are depressed and have taken drugs. I feel so helpless, ”said the doorman, who the search team did not identify.

There is a similar story of another Amritsar resident, who bought three trucks after taking out a loan of 7.5 million rupees ($ 105,352) in 2016, sensing the potential for trade between the two countries.

“I couldn’t afford to pay the bank down payments now. I sold two trucks. Many of us have returned trucks to the banks. But the situation is such that even the banks refuse to take them back. Some of us got rid of it for the price of the trash, ”said a truck owner associated with the business.

Kulvinder Sandhu, who heads the Truck Drivers Union in Attari, said that in recent months marriages have been called off and student dropout rates have increased because families have no money.

The research team found that 9,354 families making up nearly 50,000 people in the border town were directly affected by the weakening of trade ties. It included 1,724 traders, 4,050 truck owners, 126 customs officers, 2,507 laborers, 176 salesmen and others.

Trade across Kashmir suspended

Tensions have also affected trade along the Line of Control (LoC) in Jammu and Kashmir.

“Inter-LoC trade, which started as a confidence-building measure (CBM) in 2008 was suspended in April 2019. In 11 years, it has generated 75 billion rupees ($ 1.53 billion) in trade in barter terms, supporting 170,000 working days and representing freight revenue of 660 million rupees ($ 9.2 million).

“Although these numbers are tiny considering India’s overall economy, CBM had a psychological advantage, bringing together divided families on both sides of the LoC and also making it business partners,” the study argued. BRIEF.

In India, four Pakistani products – dry dates, rock salt, cement and gypsum – were in high demand. But shortly after the Pulwama attack, India increased tariffs on these products to 200%, making them unprofitable in the Indian market. Pakistan’s exports fell from an average of $ 45 million per month in 2018 to just $ 2.5 million per month between March and July 2019.

Pakistani dates covered 99% of the dry date requirement in India. “The 200% duty on imported dry dates translates into an increase of 1,600% for a 24-ton vehicle,” says the BRIEF report. The price of this poor man’s dried fruit has gone up 250 to 300 percent in India.

The report further claims that many spinning mills in Ludhiana, a district of Indian Punjab, have lost access to Faisalabad, a district of Pakistani Punjab which provides a valuable consumption base within 300 km (186 mi).

“There is a similar story on the Pakistani side, where for example, rock salt which was mainly exported to India, lost a huge market next door,” said researchers Afaq Hussain and Nikita Singh, who spent these last months traveling to border areas.

The upside down relationship between two nuclear-weapon neighbors never allowed trade relations to take off to their full potential. The World Bank has estimated the trade potential to be worth $ 37 billion per year between the two countries. However, in 2018-2019, bilateral trade amounted to $ 2.6 billion. Over the past five years, bilateral trade has remained weak – between $ 2.2 billion and $ 2.6 billion per year. He also now remains suspended.

Huge losses for airlines

The tensions in 2019 also resulted in huge losses for airlines due to the mutual ban on using their respective airspaces.

It is estimated that airlines of Pakistan and India suffered losses of up to $ 53 million and $ 80 million, respectively between February and July 2019. In addition, associated companies faced various problems operational, causing inconvenience to passengers.

Indian airline Air India was the hardest hit, losing $ 71.65 million, affecting its 21 daily flights. While among private airlines, SpiceJet lost $ 4.48 million; IndiGo, with flights to Turkey, United Arab Emirates, Saudi Arabia, Qatar, Oman and Kuwait, lost $ 3.66 million; and the loss of GoAir, whose overseas destinations include Oman, the United Arab Emirates and Kuwait, amounted to $ 300,000.

Overall, around 400 Indian flights a day have undergone longer routes while around 100 flights have been added to Iran’s already congested air corridors. Almost 451 km (280 mi) have been added to the London to Singapore flight circuit, adding to the cost and duration of the flight.

“I flew from New Delhi to London in July 2019. The trip took 11 hours. But after Pakistan opened up the airspace, the flight back from London to New Delhi took seven hours. I had to pay 20,000 rupees ($ 280) more to fly from Delhi to London, ”said Nikita Singla, one of the study’s authors.

Former Indian diplomat Arun Singh believes that while the Indian government’s decisions regarding Pakistan made sense, their impact on people and businesses needed special attention.

He described Indo-Pakistani relations as “susceptible to accidents” and subject to sudden and unexpected shifts towards renewed engagement or deepened estrangement.

Former corps commander Lt. Gen. Satish Dua said border populations have become a collateral victim of tensions between the two countries.

“Having served in Jammu and Kashmir for decades, I have witnessed as closely as possible how politics and economics are intertwined with border economies. Border trade and people are collateral victims of the Indo-Pakistani stalemate, ”he said.

Speaking to Anadolu Agency, Afaq Hussain, one of the researchers on the project, said cross-border trade in Jammu and Kashmir is essential to keep hope alive in Kashmir.

“It would have died in its infancy without the minds of those involved. It is more than just a commodity exchange. This inter-LoC barter was not designed to be an isolated economic activity, but to open a new chapter in building bridges and (re) connecting communities, ”he said.

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