India-Pak informal trade is above $5 bn: ASSOCHAM

The Dollar Business Bureau

The informal trade between India and Pakistan is projected to be more than $5 billion, nearly double the official bilateral trade between the two neighbours having a history of chequered relations, said a study by ASSOCHAM. 

The paper by ASSOCHAM on “India-Pakistan Trade” is based on well-studied documents and reports by more than top 50 think tanks and research firms, including Indian Council for Research on International Economic Relations (ICRIER), yearly reports of the Ministry of Home Affairs, Institute of South Asian Studies-National University of Singapore, Lahore Journal of Economics, among others.

“Traders/Smugglers mainly carry out the informal trade between Pakistan and India through the exchange of goods at the Indo-Pakistan borders as well as through the misuse of the personal baggage scheme through the ‘Green Channel’ facilities at international airports or railway stations,” the report said.

“The non-formal trade is also taking place via Afghanistan where goods are officially exported from India and afterwards brought into Pakistan via Peshawar,” it added.

The report said that the actual figures of informal trade are hard to calculate but there are various non-formal channels of information that have been collected over a period of time by several think tanks and research bodies.

It further aid that the three main factors contributing towards the thriving non-formal trade are rapid realisation of payments, no documentation work and very little procedural hassles, thus leading to lesser cost of transaction.

Through the informal route, exports are more from India compared to imports. The items going out from India consists of jewellery, machinery, textiles and electronic appliances, while the items imported include dry fruits, textiles, carpets and spices.

The official trade between India and Pakistan is $2.67 billion, which is far below than other routes.