The Hindu Business Line : Benefits could flow from Mumbai-Karachi sea link

IT MAY be one of the several proposals that have cropped up in the wake of the recent euphoria over the renewed India Pakistan bilateral relations. But shipping circles believe there is a strong possibility of reopening the Mumbai-Karachi sea link once trade ties between the two countries are re-established.

According to news reports, a group of shippers, shipping lines and exporters has proposed to the Indian and Pakistani authorities that they have a re-look at opening the sea link between Mumbai and Karachi, which has been closed to trade for more than two decades.

It is anybody's guess what shape these initiatives will take, as eventually it will be a political decision between the two governments. No doubt, there is tremendous potential for cargo traffic between the two countries. Bilateral trade between India and Pakistan is considerably low as compared to their global trade.

The Union Disinvestment Minister, Mr Arun Shourie, recently said at a meeting that contraband trade between India and Pakistan is ten times higher than the official annual trade figure of $250 million. A large volume of Indian products finds its way to Pakistan through Dubai.

Shipping analysts believe that if the Mumbai-Karachi sea link is reopened, cargo traffic could go up to $1 billion in the first year and reach $2 billion within the next two to three years.

But before opening the sea-route, the existing Shipping Protocol signed between two counties in 1975 needs to be amended as this allows only bilateral cargo traffic. Indian or Pakistani shipping lines cannot carry third party cargo through each other's ports.

The shippers group is understood to have made two suggestions: One, operating regular cargo services between Mumbai and Karachi and, two, starting a ferry service linking the two cities for passengers.

Both are practical propositions, but in the present situation, a ferry service may be unviable in the immediate future. At least a minimum of 500 passengers per trip is required for the service to break even. And the fare should be economical enough to attract passengers. Even then, it will take time to pick up the passenger traffic.

According to shipping analysts, even with a small subsidy, the ferry service will take at least two years to break even. The erstwhile Scindia Steam Navigation Company had to wind up its Mumbai- Karachi passenger service in the 1960s as it was incurring heavy losses.

An alternative possibility could be to start a passenger-cum-cargo service. In this, the freight on cargo could subsidise passenger fare to some extent. Here, again, initially it might be difficult to get enough passengers unless the fare is very attractive as it takes more than two days to reach Karachi from Mumbai.

The real potential lies in cargo movement. Goods such as chemicals, medicines, videotapes, cosmetics, electronic items reach from one country to the other through a third country or illegal trade.

At present, several Indian goods move to Pakistan via Dubai, and that takes a minimum of five days by sea. A direct route will reduce the voyage time by two days. The freight cost will come down almost 50 per cent.

Mr Arun Shourie had pointed out the advantage of improved Indo-Pak trade relations on the energy front. In fact, both the countries could benefit immensely from bilateral co-operation on energy. Pakistan can be a potential transit route for energy from Iran and Central Asia.

There is a proposal to construct a pipeline from Iran to India via Pakistan. This could reduce the transport cost of fuel currently being imported the Gulf countries to India.

Coming back to the Karachi-Mumbai sea link, it will take time to establish regular cargo services between both cities as several bilateral issues need to be resolved. Yet, the time is right to make a beginning to open the sea corridor.

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