India-Pakistan Trade War-Economic Effect

Islamabad cuts trade ropes with New Delhi on effect to the recent tension between the two countries. India and Pakistan share a long border but despite this, the two countries don't share any significant trade. Pakistan does not feature among India's top 35 exporters and importers, while India does not feature among Pakistan's top 10 exporters. India is not dependent on Pakistan for any major trade except some crops, but that too doesn’t affect India on even a minute level. India’s GDP is almost 7 times the size of Pakistan’s.

This act of cold war was initiated by Pakistan in the response of abolishment of Article 370; these decisions were taken at a high-level meeting chaired by Pakistan Prime Minister Imran Khan in response to the Narendra Modi government's move to dismantle the special status given to Jammu and Kashmir under Article 370 and 35A of the Indian Constitution. Pakistan has termed India's action as a violation of the United Nations' resolutions on Kashmir and upped the ante to raise the matter at various international forums, including the United Nations and the Organization for Islamic Cooperation. While announcing downgrading of diplomatic relations and suspension of bilateral trade, Pakistan also objected to India's decision of dividing the previous state of Jammu and Kashmir into two Union Territories.

Comparing Economies

The outcome of decades of hostile relations and fractured trade between India and Pakistan is that Pakistan imports far more vegetables from Indonesia, sub-Saharan Africa, far-off Canada, the US, Brazil, and Australia than it imports from its next-door neighbor India. The World Bank database provides data on exports and imports of 16 broad product categories. Of these, there are six product categories in which India features among the top 10 countries from where Pakistan imports. Pakistan imports 12.77 percent of its agriculture raw material from India. This is second only to imports from China. Pakistan also imports 12.40 percent of its total textiles and clothing, 8.22 percent chemicals, and 6.49 percent plastic/rubber from India.

In contrast, Pakistan is among the top 10 countries from which India imports hides and skins. As of 2017, 2.30 percent of the total hides and skins imported by India were from Pakistan. Besides this, there are no other major products that India imports from Pakistan, the World Bank data show. Today the bilateral trade between India and Pakistan is negligible but in the initial years of independence, despite the bloody Partition, India and Pakistan had flourishing trade ties.

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