Pakistan suffered a loss of about $7 billion in 2014 by importing items from other countries at a higher cost instead of sourcing them from India, according to a study by the New Delhi-based Research and Information System for Developing Countries (RIS).
The think-tank in the study, to be released this week, found out that the loss was substantial considering Pakistan’s GDP (nominal, 2015) was only about $270 billion.
Prime Minister Narendra Modi is slated to chair a meeting to review trade ties between India and Pakistan on Thursday.
Significantly, the RIS study’s findings are in line with the theme of Modi’s recent speech at Kozhikode (Kerala), where he called upon the people of Pakistan to fight a war on unemployment, poverty and illiteracy.
The RIS study — on ‘Costs of Non-Cooperation’ — covered 5,200 items. These included refined petroleum, palm oil, aviation spirit, motor vehicle parts, edible oil, cotton, milk powder, marine products, machinery as well as chemicals and allied products.
‘Costs of Non-Cooperation’ occurs when a country imports from the global market at prices higher than the price at which the same product is available from the regional market, and thereby incurs an additional foreign exchange expenditure on such imports, the RIS said. Many products that Pakistan imported from third countries were at least three times more costly than the price of the same item from India in export markets, it added.
“The objective of the study is to show Pakistan that they can save on the foreign exchange front if they cooperate in South Asia,” said Ram Upendra Das, professor, RIS. Pakistan is a net-importing nation with a trade deficit of $22 billion in 2015. In 2015, it imported around $44 billion, while it exported only items worth $22 billion.
India-Pakistan trade is far below potential and negligible. Trade between both the nations in 2015-16 was just $2.6 billion, while according to various estimates the annual bilateral trade has the potential to surpass $20 billion if both countries cooperate and remove barriers and restrictions. Currently, most of the trade happens indirectly through Dubai, Singapore, port of Bandar Abbas (Iran).