Informal trade between India and Pakistan far exceeds official trade. A recent paper from think tank ICRIER pegs it at $4.7 billion. The trade is mostly one sided. India exports, Pakistan imports. Most of the informal trade is routed through Dubai and Afghanistan. And, it is unlikely that recently escalated tensions between the two countries is going to impact that much. That’s because there is demand for Indian goods in Pakistan and there are enough traders in that country who will find alternate ways cater to that demand, restrictions and bans notwithstanding.

Pakistan has placed more restrictions than India on bilateral trade — the country maintains a negative list of over 1,200 items that cannot be imported from India. India too discourages imports of some 600 items from Pakistan and imposes heavy duties if these items are imported. The ICRIER paper, India’s Informal Trade with Pakistan , authored by Nisha Taneja with Samridhi Bimal estimates Pakistan imports Indian goods worth about $4 billion through informal trade and exports goods worth $0.7 billion to India. Informal trade also means revenue losses for Pakistan’s exchequer. Official trade between India and Pakistan in 2015-16 was about $2.6 billion, with India’s exports to Pakistan estimated at $2.2 billion.

Given the volume of informal trade between the two nations, there is a case for Pakistan to relook at its import restrictions. After all, most of the Indian items finding its ways into Pakistan are not of strategic interest — Pakistan imports jewellery, textiles, machinery and machine parts, electronic appliances, paper and chemicals. India imports items such as textiles (particularly cotton), dry fruits and spices through informal channels.

Should Pakistan ease restrictions on entry of goods from India and enable easier payment mechanisms, not only would its exchequer gain, but the people of Pakistan would get the goods at lower price.

Tina Edwin Senior Deputy Editor

Related Topics
comment COMMENT NOW