India-Pakistan: Business First
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India-Pakistan: Business First


On May 11, Pakistanis will go to the polls and elect a new government. For the first time in its history, the country will see a peaceful, civilian handover of the reins of state. This is an exhilarating moment in South Asia, for democratic progress in Pakistan will positively impact the dynamics of the region. Pakistan is keenly aware of this – but also of the fragility of the moment.

Nowhere is this better reflected than in the elegant port city of Karachi, which until just a few decades ago competed with Beirut for the title of ‘Paris of the East.’ It was cosmopolitan, fashionable, and creative, its people progressive, educated and secular. The population comprised of émigrés from India, many of whom carried their genetic business acumen with them, native Sindhis both Hindu and Muslim, Parsis, Christians and others from across the land, both Shia and Sunni. Like Mumbai, it was also a wealthy city, the financial center with access to the port.

Karachi still retains some of that flavor, but the population arithmetic has changed, and so has its self-definition. Of an estimated population of 20 million – the minority Parsis – Hindus and Christians are a handful. The Muhajirs, or Indian émigrés, are also dwindling. Growing in number are the Pathans, now over 5 million, who have fled their homes in the Northwest to find work in Karachi. The native Sindhi population is just 7% – and even the Governor of Sindh, who resides in a palatial colonial home in Karachi and has a sensitive post, is a non-Sindhi. The Taliban have moved into the city, and have begun an anti-Shia campaign, terrorizing and assassinating members of the community in mosques, in the streets, and demoralizing them by targeting their intellectuals – doctors and teachers.

Instead of the festive mood that typically accompanies pre-election season in India, Karachi is a city of silence. Very few of its intrepid millions are visible on the streets – afraid, say local residents. Election posters which should be hung like birthday buntings and plastered across the hoardings, have only a muted presence. A large number of Karachi’s elite have dual citizenship, and its businessmen have multinational operations from compulsion – having an office in Dubai or even in Tehran helps to hedge their bets. Under normal circumstances it would be the sign of confident, expanding business; here it is the opposite.

Still, many of Karachi’s commercial leaders are now cautiously optimistic about the future. The violence is visible, but so is the pushback from gutsy institutions like the media, the Election Commission, and the courts, making it somewhat reminiscent of India in the early 1990s. Pakistani business sees trade with India as the key to early economic progress at home. At a conference on South Asian Strategic Leadership organized this week by Karachi’s Nutshell Forum, businessman after businessman expressed this exact sentiment. Refreshingly absent from the discussion was any mention of Kashmir, of the military in Rawalpindi and its preoccupations with the border or with U.S. perfidy.

India and Pakistan “should have a trade map in the next three years,” said S. M. Muneer, the Vice Chairman of MCB Bank; he dreams of “transforming our region into a Union,” and understands the need to nurture and integrate small enterprises into the bilateral engagement. Most others talked of the common problems of energy and water scarcity, of rotting grain and lack of storage capacity, of the need to lower the cost and processes of doing business, and of political corruption and cronyism. They also talked of common strengths and potential – a youthful population, a rising middle class, geographic location, agriculture and agro-industry potential, a strengthening federation, and the need to create new models of business and of development. Though such sentiments are repeated frequently, the gap in economic growth and vitality between India and Pakistan widens visibly. 

These obvious benefits have been discussed for years – but only now does it seem to have become an imperative for business. Mirza Ikhtiar Baig, chairman of the giant Baig group, likes to retell his conversation with Indian ministers: “they say, ‘to maintain 8% GDP in India, all we need to do is open up trade with Pakistan;’ so let’s move on and remove non-tariff barriers, each nation is losing 30% to 35% in revenue by routing trade through third countries.”

The obvious immediate winners are the cement and sugar industries, both of which Pakistan has a surplus of and India a shortage of, and which can be transported at low-cost across the border. India has a growing agriculture and automobile industry, which Pakistan needs. Pakistan wants to learn India’s ICT skills, and India can leverage Pakistan’s textile manufacturing expertise and global market reach. India-Pakistan trade, currently at $2.5 billion, can reach $20 billion over the next five years, said Asrar Raouf, a senior member of Pakistan’s Federal Board of Revenue.

The road to bilateral reconciliation will be a long and treacherous one; political and military hurdles will delay the process. But perhaps economic compulsions will overtake political ones. Certainly that is the hope in Karachi, whose business community has started to make its journey across the border. 

Manjeet Kripalani is the Co-founder and Executive Director of Gateway House: Indian Council on Global Relations. The following piece was originally written for Gateway House: Indian Council on Global Relation, found here.

March 24, 2014 at 21:52

This is a right-wing position but it is what it is. Pakistani state sponsors terrorist organisations that have killed hundreds of Indians. Latest reports state that the Islamabad government may be directly responsible for smuggling of counterfeit currency in India. The Pakistani citizenry is voting in to power leaders like Nawaz Sharif who share the dias with JuD terrorists like Hafiz Saeed.

Keeping the above points in mind, Pakistanis still hope to have a trade relationship with India. So, we are being asked to develop a relationship in which Indians get killed as well as help those who are directly/indirectly responsible for the deaths to make money. It does not seem to be a logical thought process.

April 13, 2013 at 10:32

Kashmir is not negotiable, period ……. no further discussion ……… !

Khan Sahib
March 23, 2014 at 12:25

Kashmir is disputed till the final settlement is achieved. A 90% Muslim area where people do not wish to be part of india. Wake up & smell the morning tea.

Clarence Fernandez
April 4, 2014 at 09:54

If Pakistan desires Kashmir, please remember many districts in the former East Pakistan with heavy non-Muslim majorities like Khulna and the Chittagong Hill Tracts were given to Pakistan. Bear also in mind that more than 10 million Sikhs and Hindus were massacred or driven out of East and West Pakistan whereas India is home to nearly 200 million Muslims enjoying the fruits of secularism and tolerance. Partition was hastened by the eagerness of the British for nefarious purposes. It hasn’t brought anything good and our independence was a tarnished one with the British having the last laugh.

Sardar KHAN
April 12, 2013 at 23:28

Why it is always you bunderstanis (indians) depend on lies about Kashmir?Can you give any example or law under which maharaja has any right to join bunderstan?Why nehru have to promise plebicite for kashmiris to UNO?

April 12, 2013 at 22:39

Please do refer Kashmir as part of India because as 'Raja' said, Kashmir was legally acceeded to India by the then Maharaja(King) of Kashmir so Kashmir belongs to India. Now since pakistan is terrorising people of Kashmir, and please note that Kashmir does not belongs to Pakistan anyway, I do not see any reason for anybody suggesting India to withdraw its forces.

You were very right when you said 'Many others gain by the Kasmir impasse. They want permanent violence here.' because there are few countries who condemns militancy projected by Pakistan in South Asia but behind the scene they provide Pakistan with monetory and military support even though they  know very well that these fundings directly goes to promote militancy in South Asia. I think these countries are the real culprits which use Pakistan as a pawn to fulfill their own agenda. Pakistan on its own cannot support militancy in south Asia.

April 12, 2013 at 12:23

It works both ways. The terrorism threat is faced by all civilised countries. It cannot be stopped by excessive militarisation. One leads to the other. Both India and Pakistan should reciprocate and withdraw their military presence (actual and proxy) from Kashmir and allow Kashmir free choice. That can lead to direct economic benefit to all 3 nations and take out the biggest needless obstacle to complete Indian and Pakistani economic integration. But it will not happen in the foreseeable future. Many others gain by the Kasmir impasse. They want permanent violence here.

April 12, 2013 at 00:08

Don't you think that If Pakistan stops terrorising the people of Kashmir and don't kill Kashmiri people, India do not have any reason to militiarize J&K.

If you do not know then please read what happened in 1999, At that time Indian Prime Minister, whom you are accusing of militiarization of Kashmir, went to Pakistan for promoting the peace. If India will try to ease the militiary level in Kashmir then Pakistani Solidiers will shamelessly try to cross the LoC again, to get their butts kicked by Indian Army.

But I don't blame Pakistan alone for that because I don't think Indians have done enough to teach Pakistan a lesson. Reason can be that Indian politicians don't have time to think about these matters as they are busy in creating greater scams.

April 11, 2013 at 16:19

Kashmir was legally acceeded to India by Maharaja. The Islamists of Kashmir drove away the Hindu Pandits and are fighting a Jihad. India needs police and army to control violence. And India does not want Pakistan's trade or friendship. Their 'friendship' is more risky than their enmity. 

April 11, 2013 at 14:07

Unless India stops militarization of Kashmir, etc. this is not going anywhere. Trade will increase but not security or politics.

April 11, 2013 at 13:46

Quote from the article:

The road to reconciliation between India and Pakistan is likely to be a long one. But perhaps economic compulsions can overtake political ones.


In a word, no.

April 11, 2013 at 13:10

An interesting hypothesis, but one that is sadly not borne out by history.  Commerce and trade have helped start far more wars than they have deflected, especially one one nation feels that it is getting the worse part of the bargain.

Trade between India and Pakistan will have to be carried out in a very controlled and careful manner lest one side come to perceive trade to be more exploitative than beneficial.  Unlike trade between China, Japan, and South Korea, there is no third party bogeyman in the India-Pakistan equation.  Neither India nor Pakistan have a common foe as is the case in the trilateral relationship Japan, South Korea, and China.  None of the Far Eastern countries in question can trust (or even wants to trust) either of the others long enough to team up on the third and therefore destabilize the region.

India and Pakistan, however, are the sole actors within this particular relationship and have no shared or common enemy to ground their more antagonistic tendencies,  If Pakistan and India were both deeply afraid of China, for example, they could put their differences aside long enough to establish some form of trust in the form of long term trade. 

But since that is not the case, any non-antagonistic relationship between India and Pakistan must be formed first upon a leap of faith.  It must then be nurtured with an almost superhuman level of patience and understanding.  And finally it must be done in a manner that doesn't just benefit both sides equally, but must be perceived to be benefitting both sides satisfactorily.  If either side is viewed to be doing better, resentment could lead to increased strain rather than detente.

Business is a dicey proposition to be basing a relationship on.  I'm not saying it's impossible, but given the big picture it is certainly going to be difficult.

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