The Telegraph
Tuesday , April 15 , 2014
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- There are many benefits in a closer relationship with Pakistan

In my last column I summarized what Ishtiaq Ahmed wrote about Partition. I found it informative and wise. Naturally, many Pakistanis were incensed. Jinnah is their premier hero; the idea that he could have made a mistake is anathema for them. And having fought and got Pakistan, they can hardly accept that it was a mistake. So Ishtiaq Ahmed got some choice abuse. Some Indians also responded; they were generally smug and satisfied, happy to have got rid of those mad Westerners.

I lived through those years of war, Quit India, mass imprisonment of Gandhians, Independence and Partition; I remember newspapers reporting every day the number of corpses picked up on the streets of Bombay. I share the general view that Jinnah was good riddance, and that it is best for Pakistan to be a separate, independent country. I am sure our perception of history needs corrections, such as those made by Jaswant Singh, and now, Ishtiaq Ahmed. But we are lucky it is history. What matters is the future.

And that is where both India and Pakistan are missing opportunities. They are both acting like elephants in the living room; they have made normal life difficult for their citizens and their neighbours. But let me not waste time scolding them, and make some constructive suggestions. They would have been wasted on the government of Manmohan Singh, who was not bold enough to get closer even to Bangladesh, let alone Pakistan. There is a chance that we will get a bold, almost brash prime minister; I will keep him in mind.

The biggest damage the Congress governments did was to the external sector; as they departed, they have left a gaping payments deficit, accounted entirely by the deficit on merchandise trade. Two years ago, exports rose 40 per cent; last year they fell 5 per cent. And we are missing out on one of our most promising markets. Our closest neighbour is Pakistan; we export nothing to it. That is officially. India’s biggest export market is the United Arab Emirates. Last year it took $36 billion or 12 per cent of our exports. It simply does not have the market for so much; it is likely that most of our exports to it went to Pakistan and Iran. Pakistan’s total imports were of the order of $40 billion; it is possible that we supply close to a half of it. But no one talks about it. Pakistan’s official import statistics list Kuwait, Saudi Arabia, Germany, Japan, the United Kingdom and the United States of America as major suppliers. But their total share of Pakistan’s imports comes to 30 per cent; the UAE, which probably supplies between a quarter and a half of Pakistan’s imports, is not mentioned. Pakistan is ashamed to admit it, but India is probably its biggest source of imports.

Pakistan’s biggest import item, accounting for $7 billion, is petroleum products — probably some 7-8 million tonnes. That is less than two weeks’ output of Indian refineries. More important, the Reliance refinery in Jamnagar is a stone’s throw from Pakistan; its capacity is eight times Pakistan’s oil imports — and it is underutilized for lack of markets. Admittedly, one reason for its inability to sell is that the Central government subsidizes kerosene sales of its own refineries but denies the subsidy to Reliance. Any prime minister who follows Manmohan Singh should remove this injustice. But even if it were removed, Reliance — and Essar, which has a refinery in Vadinar not too far from it — would find it much cheaper to supply Pakistan. The next prime minister should talk to Pakistan to open up that market.

It is not just oil products that Pakistan imports under the counter; it no doubt imports many more things from India. If it legalized the imports, it would be able to import a lot more from India, and find imports from India much cheaper than from elsewhere — imports of engineering goods, vehicles, iron and steel, spices and so on. It has befriended China as a bulwark against India, and China has done much for it. But China cannot supply goods as cheaply as India, or provide as close and big a market.

It is not just in merchandise trade that the opportunities lie; there are also services. Foremost amongst them is transport services. One of India’s closest allies is Afghanistan; India gives it aid worth billions. All the goods given in this aid — foodgrains, construction materials, vehicles and so on — must just now be shipped to a port in Iran and then carried over terrible roads, chiefly to eastern Afghanistan. It would be far cheaper to carry them across Pakistan by road. The Americans and their allies supply their troops in Afghanistan through Karachi, whence the goods are transported via Northwest Frontier Province to Afghanistan. Our goods could be similarly carried across Pakistani Punjab. Let Pakistanis carry them in their trucks and earn some money; we will equally save money. And the same can be done with trade between Pakistan and Bangladesh: it can be carried in our trains and on Grand Trunk Road. It will create enormous demand for kebabs, which Pakistani truck drivers cannot live without.

What prevents initiatives of this sort is our belief that Pakistan is the home of terrorists. It is true for us; our worst and deadliest terrorists have come from Pakistan or been trained there. We have taken defensive measures against them, and they have worked to some extent. But while we have many enemies in Pakistan, we have made no friends. We should identify friendly Pakistanis, and reward them.

For instance, India is known the world over as an exporter of software, not of manufactured goods. Bangalore has made its name for software. Pakistan tried to get into this market, but failed; it had neither the educational capacity nor the connections with the American market. India should allow selected young educated Pakistanis to come and work in its software industry; and if Indian software companies want to set up subsidiaries in Pakistan, they should be allowed to. Hindutwits will be outraged by this idea: why should we teach Pakistanis the one thing we are good at? We should because we need to reduce our costs. No one has a monopoly of software; the American IT companies buy it from the cheapest source. Already, the Philippines is taking away our market. We need to reduce our costs, and one way may be to import Pakistanis and Bangladeshis.

It is not only the young we should befriend. Pakistan has many rich people; they go for holidays to Nepal, Sri Lanka, Thailand, Dubai — anywhere but India, because our stupid government does not give them tourist visas. Our tourist resorts could make much money if they were opened up to Pakistanis who can afford them; it is quite safe to let Shahid Khan or Mian Muhammad Mansha into India. And our stock market is down; there is no harm if they invest a few billions in it.