Source: News Bharati English04 Oct 2016 09:36:00

New Delhi, October 4: As per an ASSOCHAM study the Informal trade or smuggling of goods, between India and Pakistan is estimated at over USD five billion, almost double the official two-way commerce between the two neighbours with history of chequered ties.
Smugglers/traders 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. Informal trade is also taking place through Afghanistan whereby goods are exported officially from India to Afghanistan and later on brought into Pakistan through Peshawar.

Informal traders in both the countries have developed efficient mechanisms for information flow, risk sharing and risk mitigation. The three important contributory factors towards thriving informal trade are quick realization of payments, zero documentation and little procedural hassles leading to lower transaction costs.

The number of exports from India than imports through the smuggling route is high. Besides the Afghanistan route, other channels of such informal trade include India-Dubai-Pakistan, Wagah by rail or road and Srinagar-Muzaffarabad.  Items going from India include jewellery, textiles, machinery and electronic appliances. On the import front, the items include textiles, dry fruits, spices and carpets.

Informal trade or smuggling is over and above the ‘Third country’ trade which is generally done through Dubai and is not illegal. The ‘Third country’ trade is also done through agents in Singapore.  Through this route, exports from India include capital goods, textile machinery, dyes and chemicals, iron and ore, spices, tannery equipment, machine tools, cotton fabrics, tyres and chemicals and medicine. It is mostly exports.

Trade between Pakistan and India via Dubai has the advantage that consignments are not scrutinized as much as those coming directly from either country. So, the India-Pakistan official trade of USD 2.67 billion is far less than other channels.