Economic issues between india and pakistan relationship

economic issues between india and pakistan relationship

One such (terror) incident must not halt the process of relation building. Trade, it seems, is the only aspect of Indo-Pak relations that has not. The US-Pakistan relationship is in "serious trouble" and the mistrust A known expert on US-Pakistan relationship, Yusuf said the real issue here was that of Afghan policy reflected how it views its relationship with India. Another of India's major security concerns is also linked to Pakistan – the issue various Western states, while improving its economic relationship with China.

Infor instance, India decided to devalue the rupee believing that Pakistan would do likewise.

economic issues between india and pakistan relationship

India argued that the combination of higher raw jute prices, coupled with the devaluation of its currency, would price jute beyond its reach. Pakistan retaliated by imposing restrictions on the importation of some Indian manufactured goods.

India, Pakistan can take two-way trade to $30 billion, says Indian envoy

I regard it as highly unfortunate that, instead of facilitating the normal flow of trade between the two countries, the Government of India should have embarked on a boycott of trade with us. While fixation of the rate of currency is entirely a question for each country to decide with reference to its circumstance, trade is a matter of prices. India, however, has taken the extraordinarily unfriendly step of boycotting trade with us.

Pakistan had developed an import substitution policy in the s, effectively the creation of a manufacturing base. Bilateral trade was truncated, however, first by the war of and then the war.

India, Pakistan can take two-way trade to $30 billion, says Indian envoy

These two wars and, later, the civil unrest in Kashmir in the s had a very detrimental effect on bilateral trade because they introduced a military element into what had been, until then, a purely commercial paradigm.

They persuaded the precursor to the World Trade Organisation, the Generalised Agreement on Tariffs and Trade, to insert an India-Pakistan-specific special clause into the Text of the Generalised Agreement on Tariffs and Trade that relates to international trade to reflect this circumstance.

Taking into account the exceptional circumstances arising out of the establishment of India and Pakistan as independent states and recognising the fact that they have long constituted an economic unit, the contracting parties agree that the provisions of this Agreement shall not prevent the two countries from entering into special arrangements with respect to the trade between them, pending the establishment of their mutual trade relations on a definitive basis.

The situation turned completely in the early s when, following the collapse of its strategic partner, the Soviet Union, and realising that it would need to enter fully into the international community if it were not to become a failed state, India embraced international trade with both arms and, subsequently, saw its economy grow rapidly.

This step was taken as part of the attempt by the two countries to lay the Kashmir issue to rest by the thirtieth anniversary of their independence. New Delhi terminated all air- and land-borne trade with Pakistan following the attacks on its Parliament in Decemberwhich it alleged were carried out by Pakistani-based militants. That imposition remained in force until A restrictive maritime trade regimen was also implemented.

India–Pakistan relations - Wikipedia

As a consequence, informal trade between the two countries began, with trade occurring via third parties like Dubai, albeit at increased cost. Inthe two sides came together for a dialogue on trade. That dialogue would eventually extend over four more rounds of talks but culminated in three outcomes in The ongoing dialogue was halted in the wake of the terrorist attacks on Mumbai and only resumed in It is interesting to note, however, that no drastic measures were enacted to stop or decrease bilateral trade over that period.

In AprilPakistan initiated measures to grant MFN status to India and, in November of the same year, produced an itinerary to phase in that status. A major part of that process was for Islamabad to move from a positive list approach to a negative one, which would list only those items that could not be imported from India — around 1, products and items; for its part, New Delhi curbed its list of restricted imports from Pakistan to just over in September From the Indian perspective, this is a very small part of its overall trade.

It could be perceived, nevertheless, as a measure of the importance of trade in the bilateral relationship that the two sides persist in ensuring that it continues.

economic issues between india and pakistan relationship

In the most recent instance of alleged cross-border violence, eighteen Indian soldiers were said to have been killed by militants who crossed the border from Pakistan in late September While these actions caused much debate and calls for action against the other on both sides of their common border, it is noteworthy that even after the Indian Government said it would review trade relations, the MFN status it has given Pakistan and the terms of the Indus Water Treaty, nothing of the kind has eventuated.

The volume of trade may be expected to fall in the aftermath of the September incident but, as the previous diagram demonstrates, the general trend of trade between the two countries remains upwards.

This is borne out by the following diagram, which also indicates that while political events such as the one described can cause a downturn in trade between India and Pakistan, those ties resume and even grow once the initial anger and furore has died down. The need to maintain the basis of a good relationship and the impact of violence on bilateral trade aside, pragmatism prevails. Beguiling though that thought may be, Pakistan has found it difficult to reduce its negative list, partly due to the influence of its manufacturing sector.

It, furthermore, wants India to reciprocate for the MFN status that Islamabad has offered it by reducing the so-called non-tariff barriers that include strict licensing rules, inspection rules and the subsidies offered to Indian farmers.

economic issues between india and pakistan relationship

Given the delicacy of the current situation in India, particularly in terms of farmer suicides due to crop losses, it is difficult to see how the Modi Administration could satisfy that particular condition. The jury is still out on whether Pakistan and Afghanistan would be a fertile breeding ground for the group, given the anti-IS stand taken by the Afghan Taliban and by the Pakistani government.

In recent years, however, it appears as if New Delhi has made peace with this, preferring to ignore the Sino-Pak partnership and strengthen its own strategic ties with the United States and various Western states, while improving its economic relationship with China.

economic issues between india and pakistan relationship

The third aspect of contemporary Sino-Pak ties that bothers India is the strengthened three-way partnership between Pakistan, Afghanistan, and China. For example, in Novemberrepresentatives of the Taliban from its Doha-based office met in Beijing for talks. In February this year, China, Pakistan, and Afghanistan initiated a new trilateral strategic dialogue in Kabul.

economic issues between india and pakistan relationship

New Delhi is used to adopting a strategy of limited engagement when it comes to dealing with China — whether it is resolving border tensions or finalising an agreement on the disputed border. While on the one hand India seeks to engage China on the trade front, on the other hand it fights shy of engaging China on larger regional security issues.

IR: India-Pakistan/Indo-Pak Relations {UPSC CSE/IAS, SSC CGL/CHSL, Bank (IBPS/SBI)}

With Pakistan, New Delhi also shows a tendency to indefinitely postpone the resolution of the troublesome issue of Kashmir. Policymakers in New Delhi also exhibit a tendency to deal with what they can, rather than with what they should New Delhi also avoids addressing various emerging threats, failing to recognise them politically.

Policymakers in New Delhi also exhibit a tendency to deal with what they can, rather than with what they should. Finally, Indian diplomacy has failed to think beyond bilaterally engaging with its neighbours, or the great powers, for that matter.

US-Pakistan relationship in serious trouble: Expert

While India has engaged with Beijing on a variety of bilateral issues, it has not been able to join forces with China and other neighbours in fighting terror, stabilising Afghanistan, addressing the IS threat, or even bringing Iran into the mainstream. A wider strategic perspective India is uncomfortably placed at the heart of a geopolitical landscape — the India—China—Pakistan strategic triangle — that is beset with multiple strategic challenges.

India, for its part, must view the region from a wider, long-term strategic perspective and avoid getting tied down in petty fights with Pakistan The question, therefore, is whether the Chinese leadership can think beyond the false necessities imposed by its partnership with Pakistan to consider the region as a security complex i.