- Pakistan, which is currently reeling from massive floods, may consider importing essential food items from India.
But who said this?
- Addressing a press conference on Monday, Pakistan Finance Minister Miftah Ismail said that the government can “consider importing vegetables and other edible items from India”,
- To facilitate people after recent floods destroyed crops across the country, according to media reports.
- The minister’s comment was in response to a question.
Surge in prices
- Pakistan is witnessing a massive surge in the prices of various vegetables and fruits because of the floods,
- Which have resulted in supply-related challenges in vegetables in Balochistan, Sindh, and south Punjab.
- According to reports, floods have claimed over 1,100 lives, so far.
But why Pakistan is not doing trade with India?
- The India-Pakistan trade has been largely affected by the tensions between both nations.
- After India revoked the special status of Jammu and Kashmir in August 2019 by removing Sections of Article 370, the then Imran Khan government suspended all kinds of trade with India.
- However, an underlying reason for suspending trade between the two countries was also the 200% tariff imposed by New Delhi,
- A move that India implemented earlier that year after revoking its status as a Most Favoured Nation following the suicide bomb attack on the CRPF in Pulwama.
- But after the Covid-19 pandemic, Pakistan allowed imports of drugs and pharmaceuticals from India in May 2020.
- India had also withdrawn the most-favoured-nation (MFN) status for Pakistan in February 2019. It imposed a 200 per cent tariff on all imports from Pakistan after the Pulwama terror attack.
- However, it didn’t ban either exports to or imports from Pakistan.
How much is the trade currently?
- Despite the tensions between the two nations, Pakistan’s import from India has been rising since the beginning of the current financial year.
- During the first three months of FY23, Pakistan imported goods worth $204.83 million from India, up 73% year-on-year, according to commerce and industry ministry data.
- Sugar and pharmaceutical products were key imports.
- Apart from that Pakistan imported tea, spices, fruits and vegetables, and textiles, among others.
- There were negligible imports by India from Pakistan (only to the tune of $17 million during the April-June quarter).
- Total trade between the two countries stood at $2.6 billion in FY19 before disruptions.
- It plunged to $831 million, $329 million, and $516 million in FY20, FY21, and FY22, respectively.
Is this an opportunity?
- Nisha Taneja, professor at Indian Council for Research on International Economic Relations (ICRIER), said that going ahead, the trade between India and Pakistan should not be limited to the flood disaster.
- There should be an effort to expand the list further.
- “The decision provides a window to expand the positive list of items for trade from Pakistan’s side.
- Pakistan is expanding the list of items that can be imported from India” Taneja said.
- The media has learnt that discussions are underway at the highest levels on the possibility of extending humanitarian assistance to Pakistan but no decision has been taken yet.
- If cleared, it will be the first time since the BJP government came to power in 2014 that India will be extending aid to Pakistan on account of a natural disaster.
- In the past, under the then UPA government, India extended assistance to Pakistan for the floods in 2010, and for the earthquake in 2005.
Q) Exports and imports comes under which policy of the government?
- Commercial policy
- Fiscal policy
- Monetary policy
- Finance policy