India-Pakistan trade to decline by 60 percent


New Delhi : India-Pakistan trade is likely to see a 60 percent decline in 2009-10, with the overall trade falling from $2 billion to $900 million in the coming months on account of the current turmoil in the neighbouring country, says an industry lobby.

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A quick survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) among exporters and importers doing business with Pakistan reported that they were unwilling to travel across the border to conclude even the firmed-up deals.

The situation in Pakistan has created a “fear psychosis” among Indian exporters and importers, FICCI said.

Since the conclusion of business deals require multiple two-way visits and with no prospects of direct visits being foreseen in the near future, generating fresh business will become an onerous task, observe many companies who have now adopted a wait-and-watch policy.

However, the survey said, some Indian exporters and importers may do business with Pakistan through a third country like Dubai and Singapore.

In fact, it noted, some companies have already increased their inventories in these countries to service the Pakistani market.

According to the survey, the sectors likely to see a significant dip in cross-border trade include textiles and apparel, textile machinery, cotton, agricultural products particularly cereals, steel and chemicals.

Some representatives also said that following the recent terror attack on the Sri Lankan cricket team, trade between Pakistan and other nations from the SAARC region would also take a hit.

It is also likely that Sri Lankan companies would start importing more from India, rather than from Pakistan, they said.

The present state of the economic relations between India and Pakistan is similar to the situation during the Kargil war in 1999, when trade volumes declined significantly from $318 million in 1998-99 to $161.02 million in 1999-2000.

However, there are a few areas where exchange may continue though at a slower pace. Notable items in this list include leather and cement.