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Indian exporters who trade with Pakistan could bear the brunt of ongoing tensions

"Our civil n (sic) decent response in the past hasn't been met with reciprocity so it's time to act tough," Biocon CMD Kiran Mazumdar-Shaw tweeted immediately after Director General of Military Operations Ranbir Singh confirmed the surgical strike on Thursday morning.

Saurabh Sharma | September 30, 2016 | Updated 17:47 IST
Indian exporters could bear brunt of tensions with Pakistan

India Inc has stood behind the government and the Army to support the surgical strike against Pakistani terrorists saying "it is time to act tough".

It has also ruled out fears of any negative impact on the country's economy and trade due to the ongoing tensions with Pakistan.

"Our civil n (sic) decent response in the past hasn't been met with reciprocity so it's time to act tough," Biocon CMD Kiran Mazumdar-Shaw tweeted immediately after Director General of Military Operations Ranbir Singh confirmed the surgical strike on Thursday morning.

In a knee-jerk reaction, the stock market crashed and rupee fell on Thursday after the Indian Army's announcement of the surgical strike, but any long-term impact on the economy remains improbable.

This, however, may not bring any assurance to those Indian exporters who trade with Pakistan as they are likely to bear the brunt in case of any eventuality between the neighbouring countries.

In fact, compared to Pakistani traders, Indian exporters stand to lose more in case of any military escalation on the border.

Trade imbalance

If you look at India-Pakistan bilateral trade, it's about $2 billion annually in which India exports 80 per cent to Pakistan and latter accounts only for 20 per cent.

According to a study done by Indian Council for Research on International Economic Relations (ICRIER), informal trade between India and Pakistan was estimated to be $4.71 billion in 2013-14.

Of this, India's exports to Pakistan were estimated to be $3.99 billion and imports from Pakistan $0.72 billion.

Cotton exporters may get hit the worst as Pakistan is the largest importer of cotton from India. Back home, Pakistan, which has one of the largest textile industries in the world, is facing a cotton crisis.

Cotton production in Pakistan has fallen 35 per cent this year and imports from India turn out to be much cheaper than from Australia and Africa. In the 2015-16 season (October-September), it bought 2.5 millon bales (one bale is 170 kg); India's total cotton exports were 6.5 million bales.

India has been traditionally supplying meat, chemicals, artefacts, medicines and agriculture products to Pakistan.

This year, there has been a surge in demand for Indian dairy products and sugar, too.

India buys nuts, fruit, cement, leather products, some chemicals and rare earth materials from Pakistan.

But in a broader context, India's overall trade with Pakistan is still small compared to other countries, and the government may not be as concerned about the impact on trade.

What India exports to Pakistan via informal channels

1. Jewellery

2. Textiles

3. Paper

4. Scraps

5. Chemicals

6. Electronic appliances

7. Tyres, and betel leaves

8. Machinery and machine parts

What India imports from Pakistan

1. Textiles

2. Dry fruits

3. Spices

4. Cement

5. Carpets, fruits and vegetables

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