Identifying Non-Tariff Barriers: A Case Study of Attari-Wagah - Shodhganga
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Chapter 6
Identifying Non-Tariff Barriers: A Case Study of Attari-Wagah
Border Amritsar (Punjab)
South Asian Association for Regional Cooperation (SAARC) was formed in
1985 with the broad objectives of economic, cultural and social cooperation among
seven countries in South Asia (Dhungel, 2004). South Asian countries implemented
the unilateral trade policy reforms with the goal of connecting themselves with the
world economy (Taneja, 2001). The objective of SAFTA agreement is to support the
intra-SAARC economic cooperation, regions potential for trade and development of
their people. The agreement describes the method to remove the barriers to trade
and facilitating the cross-border trade between contracting states with the purpose of
fair competition. There have been several bilateral free trade agreements (FTAs)
within the region like India has FTAs with Bhutan, Nepal and Sri Lanka. Similarly,
FTAs are being negotiated between Pakistan and Sri Lanka and between Bangladesh
and Pakistan. Despite such efforts by the South Asian countries, trade between India
and Pakistan continues to be dreadfully low (Taneja, 2003). Under the tariff
liberalization program, SAFTA allows members to maintain a negative list of items
(Taneja et.al, 2011).
The members of SAFTA decided a ten-year phase-out of tariffs at the
beginning of January 2006. For least developed members (LDM) and non-least
developed members (NLDM), tariff reduction is different. In the first two years of
LDMs will decrease tariffs up to 30 percent, in case if the tariff is already below 30
percent then it will reduce by 10 percent every year. For the NLDMs, the maximum
tariff reduction will be 20 percent. Tariffs already below 20 percent will be reduced by
10 percent yearly. In the second phase out of tariffs reduction for LDMs, is to between
0 and 5 percent over 8 years at a rate of no less than 10 percent annually (USAID,
2005).
119Table 6.1: Tariff plan by the SAFTA member countries
First Phase Second Phase
SAARC
Two Years Third Year
Countries
1/1/2006-1/1/2008 1/1/2008-1/1/2018
LDCs
Bangladesh Reduce tariffs to the 0-5% range
Reduce maximum tariff to in 8 years (equal annually)
Bhutan
30% Reductions recommended, but
Maldives not less than 10%).
Nepal
Reduce tariffs to the 0-5% range
in 5 years (Sri Lanka: in 6 years)
Non-LDCs
Note: It is recommended that
India reductions to be made in equal
Reduce maximum tariff rate to
installments at least 15 percent
Pakistan 20%
reduction per year.
Sri Lanka Reduce tariffs to 0-5% for
products of the LDCs within a
time frame of 3 years
Source: USAID, 2005.
Almost 53 percent of the total imports of trade between SAFTA members has
subject to the negative lists (Appendix G) of the member countries. Among the larger
member countries, India and Sri Lanka have restricted up to 38 percent and 52
percent, respectively, of their total imports by value from the SAFTA members under
the sensitive list (Appendix H) category. Pakistan has excluded only 17 percent of its
imports (by value) from SAFTA members under the tariff liberalization program
(Srinivasan, 2006).
120Table 6.2: Trade between India and Pakistan through Attari Land Route
Year Exports Imports Total trade
2007-2008 N.A N.A US $ 129 million**
2011-2012 US $ 229 million*** US $ 161 million*** N.A
2012-2013 356.98 cr.* 92.59 cr.* US $ 161 million**
2013-2014 N.A N.A US $ 671 million**
Source: * Business Standard, 2014
** ASSCOM, 2014.
***Gill and Madaan, 2015.
Several studies have pointed out that trade between the two countries is
restricted by visa policy, lack of communication and infrastructure (Khan, 2009).
Several trade routes of India were covered in order to incorporate the geographical
diversity of commodities traded. In India, firms covered in the sample were spread
across Delhi (34), Amritsar (33), Mumbai (61), Chennai (20), Kolkata (17) and
Hyderabad (33) (Taneja et.al, 2014). In a similar vein, the present chapter makes an
attempt to study the non-tariff barriers faced by the traders. A field survey has been
conducted to understand the non-tariff barriers they face. For this purpose, Amritsar
city (Attari-Wagah) has been selected for the survey because of the ethnic link of a
trader with Pakistan. Total trade at this route has increased from US $129 million in
2007-08 to US $671 million in 2013-14 (Table 6.2).
This survey is carried out during the month of August-November 2016.The list
of 33 stakeholders engaged in bilateral trade was provided, out of which seven
respondents refused to talk. The survey has found three exporter, eight importers,
fifteen traders doing both the business of export and import with the Pakistan, four
clearing agent and one customs officials. The Likert scale (1 to 5) has been employed
to get responses from the stakeholders to know about the impact of confidential
information and prediction from NTBs for trade between India and Pakistan.
121Chart 6.1: Classification of Non-Tariff Barriers
Non- Tariff Barriers
Land Route
Connectivity Security clash
Political statement
Most preferred Mode of Communication
Communication Effective Communication
Best source of Communication
Cargo facilities
Warehouse
Infrastructure Barrier Lab Testing
Scanner
Gates at Wagah
Availability of Wagon Carts
Custom procedure
Custom and Single window system
documenting
Corruption and Harassment
Excessive Checking
Ease in obtaining Visas
Business Facilitation Availability of Visa
Duration of Visa
Illegal Trade
Informal Trade
Hawala Payment
122Table 6.3: Time Duration of Firms Engaged in Trade
Time Duration Name of the Firms
0-10 years VSB Import Export House
Mediflower Herbals
10-20 years Fairway Trading Company
Taran Over Seas
Vishal Enterprise
20-40 years International Carriers
Avatar Singh and Cooperation
K.L. Gupts Consultants
R.B Nath Lambha and Sons
Quick Carriers
Kishore International
Pharma and Sons
Jrahula Traders
Krishna Jamuna Das
Jagdish Commercial services
40-60 years KK Enterpriser Firm
Shivojot Mandi
JHB Enterprises
Seven Star Avenue
Vishesh Cargo Services
Sabharwal and Sons
Joginder Company
Sanjay Enterprises
Above 60 years Mohar Singh and Swaran Singh
Malik Narayan Das And Sons
Source: Field Survey, 2016.
123The chart 6.1 reveals the existence of non tariff barriers faced by traders at the
border. Table 6.3 highlights the respondents engaged in trade, it has been found that
the two firms have been in the trading activity for the period of the last eight years,
two companies engage in the trade for the past twenty years, ten of the respondents
start business since 1947.
Table 6.4: Product Exported and Imported from Pakistan
Exported Imported
Perishable Items Rice
Cotton Yarn Roots
Raw Material Crude Drugs
Cement Glass
Plants Lime Stone
Tomato Crude Drugs
Herbs , Ispaghol, Chawanprash, Hair Oil Herbs
Spices , Caradamom, Cinnamon, Jaiphal,
Rock Salt
Javitri
Karayana Spices
Vegetables Gypsum
Machinery Cement
Ajwain Dry Fruits
Tyres Dry Dates
Textile Plants Roots
Raw Cotton, Seed, Aluminum Ore, Gypsum Powder,
Crush
Gutka** Crude Oil *
Auto Parts** Glass Float*
Betel Leaves** Chemical*, Pluses*, Drugs *
Source: Field Survey, 2016.
Note: *New Items, **Banned Items
124Table 6.4 shows the primary items exported and imported by the Indian
traders to Pakistan. During the month of September-October Dry Dates have been
imported from Pakistan due to the demand of these items. Items exported to Pakistan
via Wagah Land route are perishable items, Cotton yarn, Raw material, Cement,
Plants, Tomato, Herbs, Spices, Vegetables, and Textile etc. Imports from Pakistan
items namely, Rice, Crude drugs, Limestone, Rock salt, Spices, Dry fruits, Dry dates
etc. Recently, a new item has been included in a trade like Crude oil, Chemical,
Pluses and Drugs. Some items like Gutka, Auto Parts and Betel Leaves are banned
for trade.
Connectivity Problem
With the launch of new ICP at Wagah border and change in the trade policy of
Pakistan for India since 2012, the new trade regime has established between India
and Pakistan (Gill and Madaan, 2015). Hence, to know the awareness level of the
respondents for new developments in bilateral trade is imperative. The study found
that about 87 percent of the interviewees are aware of the trade policy and tariff rates
of the two countries. 20 percent of the respondents are aware of the railway service
used for business, and they knew that goods produce under the SAFTA.
Preferred Land Route
However, traders preferred land route instead of the rail route due to the low
cost and short distance which is only 18 kilometers from Wagah-Border. The survey
indicated that around 92 percent of the respondents are satisfied with the Attari-
Wagah land route and 8 percent prefer Hussainiwala-Ganda road (Figure 6.1). Some
of the respondents stated that Jammu and Kashmir Land route, that is, Chakan Da
Bagh has done trade through a barter system. That land route should have same
road protocol which is implemented for the others land route. All the works should be
done under the same law and procedure which is implemented for the other land
routes. Due to the different procedure of trade, traders said that they suffer a lot.
125Fig. 6.1: Most Prefered Land Route
92
8
0
Munabao-Khokhraoar Hussainwala-Ganda Attari-Wagah
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
Security Clashes: The recent unprovoked firing at the border has discouraged traders.
A survey has been conducted at the time when there are incidents of clashes on the
Line of Control and at the working boundary of Pakistan and India. 78 percent of the
respondents view that security clashes at the border between the two countries
affected bilateral trade ties. Due to this, it hit their consignment.
Fig. 6.2: Impact of Security Clashes between India and Pakistan on Trade
78
7 9
3 2
Strongly Disagree Disagree Neutral Agree Strongly Agree
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
126Impact of Political Disturbance on Trade:
The validation of survey in 2014 by Taneja had a similar agenda that the two
countries had a history of unfavorable political procedures. One of the respondents
told that during the border tension in the month of July-August, 2016 has no impact
on their trade because demand for fresh fruits, meat, nuts and other agricultural items
increases on both sides. Discussions with respondents revealed that, the impact of
political disturbance is temporary. In addition to this, none of the respondents
reported that this tension has restrained the trade.
Fig. 6.3: Impact of Political Disturbance on Trade
92
2 2 1 3
Strongly Disagree Disagree Neutral Agree Strongly Agree
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Communication Barriers
The arrival of the Internet, emails and mobile phones have significantly eased
communication across the border, although roaming facilities for mobile phones from
Pakistan and India and messaging services for Indians in Pakistan are still not
available. The survey recorded in 2012 by Taneja, also found, that mode of
communication was not simple. After four years, with the development of new
technology, advanced app features have introduced by the software companies, as a
result communication barriers have reduced.
127Mode of Communication
The survey indicated that almost all the respondents are fine with the present
mode of communication. The traders recorded that they are in touch with their
partners because they use whatsapp and Skype. Because they are in touch with
them on a regular basis and it is difficult to establish new contacts. 35 percent of the
respondents record that the telephone is the best source of channel to interact with
their counterparts; 30 percent is fine with E-mail; 11 percent use mobile talk; 14
percent prefer SMS on Mobile Phone while 10 percent use Skype to interact with
their partners (Figure 6.4).
Fig 6.4: Most Preferred Mode of Communication
35
30
14
11 10
E-Mail Mobile Telephone SMS on Mobile Any other
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
Ease of Communication
The survey reveals that 50 percent of traders considered trade fairs are an
efficient operational source of communication to interrelate with the partner country
(Figure 6.5). These trade fairs act as imperative platforms for them to interact with the
trading partner and be familiar with each others trade policy and quality of products,
standard of product, technologies, etc. 70 percent of the respondents record that, visit
as a tourist is the better way for trade and only 20 percent favour west portal as the
foremost approach to identify the demand of merchandises in other countries and 10
128percent prefer mobile talks as the best way. Respondents have pointed out that it is
difficult for Pakistani traders to get a visa. Whenever there are border clashes at the
frontier, the mobile connections are not working. They also state that for the
verification of visa documents, there should be a police station in the cities (near to
their offices) where verification will be held. To avoid all these hectic schedules they
do not visit Pakistan. They prefer a trade fair, which is the best option for them to
meet their counterparts.
Fig. 6.5: Ease of Communication
50
20
15
10
3 2
West Port Newspaper Trade Fair Tourist Visit Electronic Any Other
Media
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
Infrastructure Constraints
Lack of proper and inefficient infrastructure can raise transaction costs of
trading. There are numerous blockages for transport of merchandise by the rail route.
At present, goods are interchanged by rail through the goods wagon or by parcel
wagons which are attached to the passenger train, Samjhauta Express (Taneja,
2014). There is a shortage of wagons as demand surpasses supply and goods are
stuck for as long as 20 days. Again the allocation of wagons can take up to two
months. Indian exporters assert that, there is no compensation that they get, if their
goods are damaged. In spite of this, they have to pay the penalty. In the meantime
the wagon balancing takes place only thrice a month, still there is a shortage of
129wagons. The traders have pointed out that carts that are used at present are
obsolete. There is no facility for movement of containerized rail consignment from
Attari-Wagah Border. All containerized cargo has to be progressed by the sea route.
An improved infrastructure facility at ICP on Wagah border has the foremost
prerequisite for traders. The majority of the Indian stakeholders, almost 84 percent
consider that improved infrastructure facilities on Attari Border will increase the trade
(Figure 6.6).
Fig . 6.6: Impact of Infrastructure on Trade
84
11
5
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Cargo Facilities
55 percent of the respondents believe that with the better-containerized cargo
service at the Wagah border, would improve the respective trade manifolds. 45
percent of the respondents perceive its positive influence on the bilateral trade
(Figure 6.7).
130Fig. 6.7: Cargo Facilities
55
45
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Accessibility of Warehouse
Warehousing and holding areas are necessary to promote trade. The
availability of safe and secure storage and holding areas are critical in protecting the
goods against stealing and damage. The availability of warehouse seems to be lower
at the Wagah Border, Amritsar. The discussions during the survey discovered that
stores are operating at full capacity and are not equipped to handle the existing trade
volumes. Inefficient warehouse facilities at border create a major problem in bilateral
trade.
Fig 6.8: Warehouse Facilities
93
3 4
Very Low Low Average High Very High
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
131Availability of Wagons
The respondents revealed that the availability of wagon is low/very low
because they depend on the arrival of Pakistani wagons. So the demand for wagons
by Indian traders is more. After the attack of Heroin in a cement consignment carried
out by rail in the Amritsar railway station in July 2012, the demand for rail wagons has
come down. In fact, exports of dates and cement have shifted to the road routes. The
scarcity of wagons was another hurdle in trade via land routes. 80 percent of the
Indian respondents recorded that they want more wagon (Figure 6.9).
Time for Lab Testing
Lab testing is a part of customs clearance producer applicable usually to
imported goods. This is important to measure the standard of imported goods and to
assess the specification of the product (Taneja and Pohit, 2014). The respondents
stated that for the testing of their commodities, it takes a long time. 93 percent of the
respondents reported that there are no proper warehouse facilities at the Attari-
Wagah border. As a result, their items are jammed for a long day and their payment
have been stopped.
Fig 6.9: Demand for Extra Wagons
80
15
4
1
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
132Scanner
The screening of trade items for security reasons is another hurdle in India-
Pakistan trade, by land route. 95 percent of respondents requested for a full body
scanner on the Indian side of the border for increasing mutual trade between India
and Pakistan (Figure 6.12). During the discussion, respondents stated that Pakistan
has already two full body truck scanners on its side of the frontier.
Fig 6.10: Facilitation of Scanner on Indian Side Border
95
2 3
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Roaming Facilities
Although roaming facilities for the mobile cell from Pakistan and India is not
available. The survey indicated that 80 percent of the respondents record that
roaming facilities affect their trade (Figure 6.11). Both the countries are not allowing
mobile roaming facility to their businessmen. Further, the present call rates for Indian
traders are Rs. 13.5 per minute while the Pakistan traders have to pay only Rs. 3.62
per minute. For this, they have devised a remedy in which Indian traders place a
missed call on their Pakistani traders number and they call them back. In this way,
there is no much impact on this high call roaming charges on the trade. 80 percent of
them opine that higher roaming charges have a very high impact on trade.
133Fig 6.11: Impact of Roaming Facilities on Trade
80
10
6
1 3
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
More Gates at the Wagah border
During the discussion with the traders about the opening of new gates, there is
only one gate for exports to Pakistan and imports from Afghanistan, movement of
passengers by bus and on foot. The border ceremony conducted by the Border
Security Force (BSF) also takes place at the same gate. The trade occurs only from
8:00 a.m. to 4:00 p.m. and the gate is closed at 4:00 p.m. for the border ceremony;
hence no trade can take place after the gate is closed. Even Indian and Pakistani
trucks are not allowed to cross the border of their respective countries, the trucks
have to wait for the next morning at the gate itself. Another problem that they face at
present is to pay a parking fee of the truck Rs. 250 per day.
Goods are unloaded from the trucks and transported on head-loads by coolies
up to the zero line where the goods are handed over to Pakistani coolies. Only in the
case of frozen meat, cold storage trucks are allowed to come up to the zero line. In a
day, only 10-12 trucks can cross the border. The road protocol is a time-consuming
operation. In a 2012 amendment in the road protocol, Indian and Pakistani trucks are
allowed to cross the border and unload. 45 percent reported that opening of more
gates at the Wagah border must have a significant positive impact on the bilateral
134trade. Only 5 percent of the respondents consider that there is no much impact on the
trade because they trade only two-three items (Figure 6.11).
Fig 6.12: Demand for New Gates
45
30
20
5
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Customs and Documentation
The customs authorities play an important role to promote the trade. Land
custom stations are located at road, rail, sea and airport (Taneja et.al., 2014). The
survey has been conducted to understand which mode has the least or the most
impediments. The earliest studies seem to suggest that the most inefficient route was
the rail custom station at Attari, Amritsar (Gill and Maadan, 2014; Taneja, 2013).
Time taken by Customs to process the documents
The time has taken in preparing the material by the customs is two to three
hours (either manually or electronically) till the goods are released. The primary
documents required for trade include an Origin Invoice, Packing List, Quality Control
Certificate, Bill of Export/Import, Certificate of Origin. However, Indian traders do not
face any difficulty in the processing of their documents till all the work has done
appropriately. The survey indicates that 86 percent of the respondents use the
135Internet to file their papers and 14 percent use hard copy to submit their reports. 85
percent of the traders told that processing of time on the road port custom is high/very
high (Figure 6.13).
Fig 6.13: Time Taken by Customs to Process the Documents
45
40
10
5
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Single Window System
89 percent of the traders stated that they are satisfied with the present system
of the single window system (Figure 6.14).
Fig 6.14: Preference for Single Window System
89
3 7
Strongly Disagree Disagree Neutral Agree Strongly Agree
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
136Pruning of Sensitive List
All the traders are aware of the sensitive list of items. Exporters reported that if
all the items are allowed for bilateral trade, it would have a positive impact on their
business. One of the exporters stated that 80 percent of exports of essential items
have been going on and only 20 percent of imports come from Pakistan which is
mainly Herbs and Textile. Recently, the Textile boosted their trade. 90 percent believe
that if more items are pruned for trade, then it will definitely have a positive impact on
their trade relations (Figure 6.15).
Fig 6.15:Impact of Pruning Sensitive List on Bilateral Trade
90
3 5
2
Very Low Low Average High Very High
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
Corruption and Harassment
Integrated Check Post (ICP) has been established to facilitate trade through
land route to Pakistan. 67 percent of the respondents consider that there are cases of
corruption/harassment at the land customs station at a high level (Figure 6.16). These
need to be addressed by taking up the matter with the officials.
137Fig 6.16: Corruption and Harassment
67
15
12
2 4
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Excessive Checking
The political tensions and the security issues between India and Pakistan create
the environment of excessive checking of consignments by customs. Sometimes it
works as a barrier to trade between the two countries. The traders complained that
security checks at ICP are more time consuming, which should be replaced with a
more efficient electronic equipments using better technology such as scanners. The
security arrangements in case of rail are inefficient, and facilities are inadequate. The
survey indicates that 95 percent of the respondents felt the excessive check create
hurdles in the trade, as their items do not reach in time and also perishable items
usually damage due to lack of space. They pointed out that during rainy seasons their
truck loaded with exportable goods remains outside without any shed. As a result,
they face a lot of losses (Figure 6.17).
138Fig 6.17: Impact of Excessive Checking
90
6
0 1 2
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Lack of Business Facilitation Policies: The business facilitation policies enable to
smooth any business. In case of traders of these countries, the policies are not
business friendly for them.
Difficulty in Obtaining Visas
Several studies have pointed out that the business between two countries is
affected by the restrictive visa policy (Khan 2009; Gill and Madaan 2016). In a similar
view, the survey indicated that Indian traders find it easier to obtain visas than their
Pakistani counterparts. 90 percent of the respondents expected that the visa policy is
liberal in the current scenario. Almost 70 percent of the traders stated that fifteen days
are sufficient for the trade. 18 percent of the respondents mentioned that the duration
of visa should be increased for more than one month so that they can interact with
their counterparts to know the quality, standard, and market access. 7 percent of the
respondents reported that one or two days are sufficient because frequent visit is not
easy and there are no possibilities of advance payment (Figure 6.18).
139Fig 6.18: Duration of Visa
70
18
7
3 2
One to Two days One Week Two Week One Month Two Month
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Availability of Visa
To make trade mutually beneficiary, the visits of traders have to be frequent in
each country. It requires a liberal visa regime, as 55 percent of the Indian
respondents stated that visa-on-arrival is good for them to enhance the trade and 30
percent mentioned that visa policy is less liberal.
Fig 6.19: Availability of Visa
55
30
10
5
Less liberal Easy More Liberal On arrival
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
140Banking Facilities
The availability of banking services is required for quick clearance of payments
by the buyers and sellers of commodities. 99 percent of the respondents record that
they are satisfied with the present arrangements with the bank of payments; they can
easily transfer funds from their bank to the nominated bank electronically. 95 percent
are happy with the efficiency of the bank. The availability of these facilities would lead
to the increase in bilateral trade (Figure 6.20).
Fig 6.20: Impact of Banks
70
25
10
5
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Informal Trade
The informal trade happens in those commodities which are not in Pakistan’s
positive list and have a high tariff in Pakistan (Acharya, 2012). The informal trade
creates difficulties in payments by creating informal payment mechanism. 20 percent
of the respondents agree that Hawala/irregular payments are going on between India
and Pakistan due to the over invoicing of the trade payments. It is further reported by
21 percent of the respondents that irregular payments are affecting the normal trade
between India and Pakistan at a high/very high level (Figure 6.21). During the
discussion, one of the respondents stated that they sent 600 bags of items to
Pakistan, but only 580 bags reached in Pakistan. They usually pay six-times fair
141charges for their commodities stuck at the border and moreover, customs officer does
not take any responsibility. They wash their hands by giving them set up receipt,
which will save the duty of customs officials.
Fig 6.21: Impact of Informal Trade on Formal Trade
76
15
6 3
Strongly Disagree Disagree Neutral Agree Strongly Agree
Source: Field Survey, 2016
Note: Figures are percentage of the responses.
Convenient Route
Almost 99 percent of respondents are satisfied with the land route because they
are doing trade for the period of more than fifty years. The land route proved to be
beneficial for the traders. In the case of clashes between the countries, they do trade
by another mode via sea route which is less expensive as compared to air route.
Fig 6.22: Convienent Route For Trade
99
1
Land Sea Air Anyother
Source: Field Survey, 2016. Note: Figures are percentage of the responses
142Irregular Payment
It is further reported by 47 percent of the Indian respondents that the impact of
irregular payments (Hawala) is very high and it has a negative impact on their trade
(Figure 6.23). 20 percent of the traders prefer to trade through another country like
Afghanistan, Gulf countries, Nepal, Bangladesh, Sri Lanka, and with other SAARC
countries. And 80 percent favour trade with Pakistan due to their ethnic languages
and links.
Fig 6.23: Hawala Payment
90
2 2 5
1
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses
Impact of Illegal Trade
In spite of the occurrence of informal trade known as quasi legal on the border,
illegal trade also persists. Under invoicing, misclassification and bribery of customs
and other officials are best interpreted as illegal. The majority of the traders record
that the impact of illegal trade is very high. They accept it, but none of them want to
give detailed information on it.
143Fig 6.24: Impact of Illegal Trade on Legal Trade
97
1 2
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Future Expectations
Both the countries are interested in increasing the cross border trade to
improve the trade relations. 78 percent of the Indian respondents expected that
mutual trade between India and Pakistan would increase in the future at a high/very
high level (Figure 6.25). After the announcement of demonetization, most of the
traders have faced the problem of reduced demand for their commodities. After 8
November 2016, the demand of their commodities has been reduced around 60-70
percent.
Fig 6.25: Future Expectation
78
15
5 2
Significantly Increase No change Reduce Drastically
increase reduce
Source: Field Survey, 2016. Note: Figures are percentage of the responses.
144The view of the respondents about the statement ‘If Pakistan allows the imports
of all items instead of 137 items via Wagah’ that it would significantly increase the
mutual trade between India and Pakistan. 92 percent of the Indian respondents
expected that if Pakistan allows all the 137 items via Wagah border, then it will have
strengthened the trade (Figure 6.27). Five percent respondents viewed that it will not
have any effect on business.
Fig 6.26: Impact of Increased Items from Pakistan on Bilateral Trade
92
5 3
Significantly increase Increase No change Reduce Drastically reduce
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
Labeling of the Product
92 percent of the Indian respondents consider that the country label on
tradable goods have a positive impact on bilateral trade (Figure 6.28). In fact, several
traders viewed that some Pakistani products like Dry Dates and Textiles are in high
demand in the Indian market.
145Fig 6.27: Labeling of Product
92
5
2 1
Very Low Low Average High Very High
Source: Field Survey, 2016.
Note: Figures are percentage of the responses.
New Facilities at ICP Wagah-Border
30 percent of the respondents record that they got new facilities at the
integrated checkpoint at Attari. 70 percent of the traders stated that they do not get
any new facilities at Attari border (Figure 6.29). They are much satisfied with new
market created especially for food and vegetable.
Fig 6.28: New Facilities at ICP Wagah-Border
70
30
YES NO
Source: Field Survey, 2016. Note: Figures are percentage of the responses.
146Table 6.5: Main Non Tariff Barriers (NTBs) being faced by the Traders
Sr. No. NTBs Percentage
1. Security Clashes 92
2. Hawala payment 90
3. Infrastructure Constraints 84
4. Roaming facilities 80
5. Informal trade 76
6. Corruption and Harassment 67
Source: Field Survey, 2016.
Note: Figures are percentage of the responses
Table 6.5 reveals the main non-tariff barriers being faced by the traders. 92
percent of the respondents stated that due to the security clashes at the Attari-Wagah
border their consignment has been stopped. 80 percent mentioned that due to the
high charges of roaming facilities, they are not properly able to converse with their
counterparts. 84 percent of the respondents record that there should be more space
for warehouse facilities, storage facilities for their goods shipment. 76 percent of the
respondents viewed that due to the informal trade, demand for their goods decreases.
The respondents’ suggestion for the responses has been taken in the form of
Likert scale. Table 6.6 reveals the preferences described for each item by the
respondents. The ranking represents the most preferred, and the ranking five makes
the least preferred item. The table illustrates that 100 percent of the respondents
preferred the role of banks and communication plays a very essential role to promote
trade as it will boost their trade and build stronger trade relations between both the
countries. The respondents viewed that the biggest problem that they face is
excessive security check as it creates the issue of payments. According to them,
there should be the expansion of trade through the Attari-Wagah border and the
147opening of the second gate at the Integrated Checkpoint. In the same manner, 86
percent of the subjects emphasize the need of establishing a single window system.
Table 6.6: Ranking of Suggested Trade Measures
Number of
Trade Measure Ranking Percentage
respondent firm
Banking Facilities 01 29 100
Electronic Communication
01 29 100
Facilitates
Single Window System 02 25 86
Timely discussions among all trading
03 24 83
agents
Warehouse and Cold Storage
04 20 69
Facilities
Avoidance of Hectic Security Checks 01 29 100
Need for Less Documentation And
03 24 83
Procedures
Electronic Filing of the Documents 04 20 69
Greater Transportation Infrastructure 05 05 17
Transparency and Access to Trade
05 06 21
Regulation And Procedures
Uniform and Non-Discriminatory
05 10 34
Rules
Avoidance of Excessive Checking 05 29 100
Source: Field Survey, 2016.
Note: Figures are percentage of the responses
Informal trade between India and Pakistan
Several studies recognize that informal trade between the two countries is
large and pervasive. The informal trade estimates provided at various points of time
by various scholars are evaluated. High tariff is the primary cause of informal trade
across the borders. The informal trade attracts mainly the group of consumer goods.
148The products like clothing, food, etc. are traded informally. As the prices of these
goods are tiny, it makes the casual trade profitable (Siriwardana, 2001). The situation
of informal trade arises due to the presence of non-tariff barriers (NTBs) in the form of
quantitative and other restriction (Taneja, 2004).
Magnitude and Composition of Informal Trade between India and Pakistan
Some studies have simply identified the commodities traded informally; some
have provided guess estimates on total quantities or commodities traded informally.
According to the estimates of The Economist, the Informal trade of India to Pakistan
has US $ 2000 million in 1996. But the study of Taneja (2012-13) depict that informal
trade has increased from US $ 465 million in 2005 to US $ 4.71 billion in 2012-13
(Table 6.7).
A very recent study by ICRIER 2016 reveals that high tariffs, political tension,
infrastructure impediments, ease of trading goods via third countries have generated
a thriving industry for informal trade between the two South Asian giants. 58 percent
of the traders cited ease of sending goods via third countries. The commodities are
real jewellery namely gold, diamond and precious stones, which have accounted for
23 percent share in Informal exports from India to Pakistan. Most of the informal trade
between the two countries are also to be found via a third country, especially Dubai,
about 68 percent of India’s informal exports to Pakistan are found to be made via this
route. 59 percent of informal imports from Pakistan are accounted by passengers
travelling by bus or rail. 24 percent of informal imports from Pakistan are via Line of
Control trade routes, while 17 percent is via Dubai (Jain, 2016).
149Table 6.7: Estimates of India-Pakistan Informal Trade
Author Year of Informal Informal Total
Study exports from imports informal
trade (US$
India to from
million)
Pakistan (US$ Pakistan to
million) India (US$
million)
The Economist* 1996 - - 2000
Government of 1996 50 50 100
Pakistan*
Government of 1996 a - 700 to 800
Pakistan*
Nabi and Naseem* 2001 - - 250
Khan et. al.* 2001 - - 438
Mukherjee* - - - 545
ASSOCHAM* 2005 - - 965
Taneja and Jain 2012-13 4 billion 720 billion 4.71 billion
Source: Taneja*, 2004.
Taneja and Jain, 2015.
Based on the varied studies, Table 6.8 depicts the composition of informal
exports from India to Pakistan. According to Government of Pakistan (1996) and Field
survey (2016) Betel leaves, Textile, Confectionery, Electronic appliances, Paper, Dry
Fruits and Liquor have been informally traded from India via third route due to the
high charges. (approximately 258 for per gram on betel leave). Other items, namely
Cattle and Other Livestock, Spices, Tea, Tubes, Silk Fabric, Medical Herbs are not
informally traded in 2015-2016.
Table 6.9 shows the informal imports from Pakistan to India by the different
studies. The major commodities are Textile, Spices, Wheat, Edible Oils, Consumer
150goods, Synthetic fibers followed by the Dry fruits, Plastic Goods, Textile and Clothing,
Melamine Dinner Sets and Tobacco products. From the study of Taneja, 2015
commodities, namely Dry Fruits and Plastic Goods are not under the category of
informal trade. According to Khan, Sugar, Ghee and Tobacco products come under
the category of informal trade. On the other hand, the Government of Pakistan
recorded that Cattle and Other Livestock, Betel Leaves, Spices, Tubes, Tyres, Silk
Fabric, Semi-Precious Stones, Dry Fruits, Medical Herbs and Liquor come under the
category of informal trade.
It can be summarized that non-tariff barriers are still prominent at the Attari
Wagah Route. The major non-tariff barriers faced by the traders are security clashes,
infrastructure constraints, corruption and harassment, informal trade and Hawala
payment. This is the major reason for the existence of the informal trade in this route.
The bilateral trade between India and Pakistan will get upgraded when these barriers
are eliminated forever. The imports plays a tremendous role among both the
countries throws the enhancement of trade by introducing technology into partner
countries. If both the nations have strong market, then the interference of a third route
could be excluded at the same time it will enable both the countries to enjoy the
benefits of low transportation cost which gradually increase the revenue of the
government as well as the welfare of the society. Thus, the trade will earn the
potential to fill the gaps between both the countries which resulted in the emergence
of the primary issues since independence. In addition to this, the wider trade with
Pakistan will generate the scope and opportunity for transit trade beyond Pakistan,
and spreads to Afghanistan and Central Asia.
151Table 6.8: Composition of Informal Exports from India to Pakistan
Khan
GOP GOP Mukherji FICCI PHDCCI ASSOCHAM Taneja, Survey
et. al.
1996 1996 2001 2001 2004 2006 2015 2016
2005
Cattle and other
livestock
Betel leaves
Spices
Tea
Tyres
Tubes
Silk fabric
Tubes
Silk fabric
Semi-precious
stones
Silver metal
Dry fruits
Betal items
Homeopathic
medicines
Medicinal herbs
Film magazines
Liquor
Auto parts
Chemicals
Cotton and silk
sarees
Cloth
Viscose fibre
Stainless steel
Cosmetics
Cotton fabric
Confectionaries
Industrial
machinery
Cement
Tannery equipment
Video tapes,
cassettes
Pharmaceutical
Jewellery
Biri
Blankets
Razor blades
Textile
Electronics
appliance
Paper
Source: Taneja, 2004. Taneja, 2015. Field Survey, 2016.
152Table 6.9: Composition of Informal Imports from Pakistan to India
GOP GOP Mukherji FICCI PHDCCI ASSOCHAM Khan Taneja, Survey
1996 1996 2001 2001 2004 2006 et. al. 2015 2016
2005
Textile
Dried fruits
Spices
Carpets
Wheat
Edible oil
Misc.
Consumer
goods
Steel and
copper scrap
Dry fruits
Water coolers
Steel and
copper scrap
Synthetic
fabrics
Gold
Narcotics
Second hand
clothing
Plastic goods
Pulses
Spices
Textiles and
clothing
Melamine
dinner sets
Sugar
Ghee
Tobacco
products
Leather
products
Video games
and CDs
Source: Taneja, 2004.
Taneja, 2015.
Field Survey, 2016.
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