Punjab Punjab Trade – Case for Opening Up of Wagha Attari Route By Huma Fakhar Managing Partner MAP Services Group www.mapservicesgroup.com Background • Before partition the flow of economic progress of the region was towards central Punjab represented by two prominent cities, Lahore as political capital of Punjab and cultural centre of north India and Amritsar as centre of trade and commerce. • East Punjab and West Punjab were allocated respectively to India and Pakistan in 1947. • There was a tremendous trade route from Sialkot right upto Ambala • Punjab strip has the potential to be the food bowl for the two countries including a strong base for industrial progress. • The line of partition changed the direction of economic progress from the region centric towards outside big cities of the two countries as the two central cities of the region (Lahore and Amritsar) had been converted into border cities. However, things did seem to be amiable and pragmatic for a while • In 1948-49 Pakistan’s exports to India accounted for 56% of its total exports while 32% of Pakistan’s imports came from India . The two countries were trading normally during this turbulent period. India was Pakistan’s largest trading partner and this continued to be the case till 1955-56. • Between 1948 and 1965, Pakistan and India used a number of land routes for bilateral trade. These included eight (8) Customs stations in Punjab province at Wagha, Takia Ghawindi, Khem Karan, Ganda Singhwala, Mughalpura Railway Station, Lahore Railway Station, Haripur Bund on River Chenab, and the Macleod Ganj Road Railway Station. • There were three (3) custom check post in Sindh at Khokrapar, Gadro and Chhor. • Not only this Pakistan and India even signed a bilateral agreement on 22 nd December 1957 to facilitate border trade invoking Article 24 paragraph 3(a) of GATT. • Similarly, Pakistan and Afghanistan signed a number of agreements to facilitate land route trade. The two countries signed the First Pakistan- Afghanistan Transit Trade Agreement on May 29, 1958 at Kabul which allowed transit of goods from India via Lahore. And then restrictive attitudes crept in? Visa Regime got restricted Financial Services got retricted Land and Railway Sea Route Limited Land Routes Infrastructure at Wagha Attari Warehousing Truck movement problems Erratic Rail traffic Empty carriage Amritsar Lahore Railways no infrastructure Delayed Custom procedures All this gave way to informal trade • History shows that the economies which control trade and investment corridors are the ones that shape the rules of international competition. Over the past decade, those corridors have increasingly become occupied by emerging markets— engaging with each other, “E2E. • 20 years ago, global exports from developing emerging world was 44 percent; 2012 it has reached a record high of 70 percent. • Same is the case with Asia, Sixty percent of developing Asia’s exports (excluding China and India) now goes to other emerging economies. why is there the need to reverse the retrictive trends? • The ICP has dedicated cargo and passenger terminals under one roof for the smooth transition of people and cargo from India to Pakistan. • The Attari ICP has most modern facilities, Built at a cost of nearly Rs.150 crore and spread over about 130 acres, It’s the first of 13 ICPs that India is building along the international border with other countries. • While exporters can also send over 250 trucks a day compared to 100-150 trucks going to Pakistan now. The timings for trade has also been increased to 7am-7pm per day from 8am-4pm, Among other things, installation of truck scanners and drug scanners is being considered by the central government at the Attari ICP. • Facilities at the Wagah ICP in Pakistan may not be able at present to match the ones in Attari in terms of technology, equipment and handling the volume of cargo and passengers. Pakistan has only two gates at its ICP and old warehouses. • "This is largely considered a quantum leap for India-Pakistan trade prospects, expected to increase from $2.5 billion to nearly $10 billion soon. Punjab, in particular, and north India in general are slated to benefit the most due to augmented infrastructure • However, what has come as a dampener for traders is that the Pakistan government has still not allowed trade of items freely from the Attari-Wagah land route despite it being the cheapest and shortest trade route. 137 ITEMs only There has been some good news? • "On March 20, 2012, the government of Pakistan notified its much awaited Negative List, which opened up trade for an additional perhaps 5,000 items of trade. This was indeed a quantum jump from the less than 2,000 items which were earlier allowed to be imported from India. However, the rude shock is that out of these only 137 items can be imported through the Wagah road route," Gunbir Singh pointed out. This most important to boost punjab pinjab trade… • Punjab Railway tracks are not included in gel in the newly-established ICP to further boost trade by including railways • Transit trade still not allowed which can boost services sector in and producers in both Punjab s….to be restored as per 1958 agreement in Kabul • The $4 billion refinery near Bhatinda in India’s northern Punjab state can process nine million tons of crude oil a year. The refinery is 175 kilometers from the eastern Pakistani city of Lahore. • Opening more trade routes such as Hussainiwala- Ganda Singh is imperative as these would save immense time and transactions costs for busi- nessmen on both sides. This route was an important trade route in the pre-1971 period. Nearly 100 trucks carrying dry fruit and other fruits from Afghanistan and Pakistan used to pass through the Hussainiwala check post before 1971. This route was used by the Indian traders to export rice-shelling equipment and farm machinery to Pakistan and beyond. Ps could change the landscape and face.. Even with all this effort there is a lot to desire still • The beneficiary – Consumer and producer both • The Gains through – Cost of transaction, storage (Mumbai Kandala), transhipment (several modes of transport cause wastage time and effort • What is being taken away agri-lands, compatiable weather cycles for agri-trade • 10 days gap ahead of Pakistan glut in India and shortage in Pakistan and vice versa A look at the products at wagha • Wheat • Fresh vegetables • Flowers • Motor parts • Agri machinery Agri Products from E Punjab • Dry fruits • Fruit squashes • Salt • Cotton • Oil seeds • Fresh fruits and vegetables Agri Products from West Punjab • While Trade and increasing products is important it is extremely important to increase the procedures and processes… • is important for the opportunities Trade Facilitation will have a great role to play. • We look at the following statistics and we see both countries are far behind: To further strengthen trade key is strengthen procedures - Trade Plus Potential • Automation of Customs approvals, Singapore 10 minutes etrade, Denmark 100 % electronic..why cant we aim for 30% • Single window at Customs check points • No helpdesk though there are custom collaboration agreements • No quarantine on Wagha border • GCC market for food • Investments all over Africa, Philipines, Indonesia • The nature of contracts were job economy and exports. • Pakistan had land water but no human resource, Haryana is full of such human resource • India input cost are very high • Global resource constraint • Rural development on both ps ignored Why is there need for supply chain in agri-business - Food Security • Middle Class, Governments and Forum Shopping • China has developed its supply chain with Multinationals • A co-ordinated effort with Pepsi in tomatoes in India • Lays in Pakistan side • Co-ordination of NGO Sector is essential • SME suppliers will be a boost to the agri industries What is needed for supply chanion networks do we have it Supply chain Agri business • Skill Development • Population as an asset • Migration to Gulf by Indo Pak labour force • IT and Agriculture can prove to be the asset Demography • India and Pakistan can co-oridinate through Geographical indications ie Kasmati, Neem etc.. International cooperation History is full of examples of economic potential wasted through insularity and the failure to establish influence over trade networks. yet owing to a succession of inward- looking policies that constricted trade and financial flows, China missed out on the exponential economic growth associated with the Industrial Revolution. The regional supply chain is almost ready, and Punjab Punjab Trade could be a great start towards a regionally balanced growth. Pakistan s SME can tap into India s Knowledge economy • R & D and IT sharing in agriculture, technical textiles, pharmaceuticals, automotive parts, light engineering, packaged food etc. •The two Punjab s need to set up bilateral commissions for NTB removal for Wagha Attari, travel, Social and Cultural Collaboration, •Wagha Attari could be a gold mine for Pakistan, for transit trade, a spring board for India to new markets, while East Asian s go ahead we cannot afford to remain quiet about it •Both Punjab Punjab have tremendous potential for intra industry and intra firm trade, services entertainment, tourism, IT, KCC and Assochamber and CII says trade to increase upto 10 billion usd? Can we then still wait? • Global displacement of subsidy regime and with Indian domestic reforms, what if Indian subsidies on wheat and sugar are removed. In the short and long term both Pakistan and India view trade as a deficit management policy. Same is the case with Pakistani fans in India and Indian bicycles in Pakistan. • Even a 5 % of the North Punjab market can bring such tremendous gains to Punjab the engineering hub and the Haryana in agriculture collaborations can do wonders PDA and NDDC, such collaborations will have tremendous learnings.