Building transit trade’s coffin

For much too long we have believed Kabul to be dependent on Islamabad for trade. Even as transit trade tickled away from Pakistan to Iran, there was little change in the status quo. So far, we have already lost 40 percent of our trade to Iran and this trend is worsening. The latest sea route from India to Afghanistan via Iran is the next nail in the coffin of Afghan transit trade, the coffin that we are helping build.

On one hand we have Indian investment in Chabahar's port that sent its first wheat shipment to Afghanistan last week. India has also opened an air freight corridor to increase access to the Afghan market. On the other hand, trade between Pakistan and Afghanistan via Torkham came to a halt this week. Custom authorities demanded clearing agents to show several documents related to import and export; a requirement that had not be implemented previously and hence caught the traders unprepared while nearly 800 loaded trucks remained stranded on both side of the border.

While Pakistan ignores the crumbling transit trade, India has been busy building it. India is investing $500 million in Chabahar port to build new terminals, cargo berth and connecting road and rail lines to improve linkages with Afghanistan and Central Asian Republics. In the coming month, India plans to send six more wheat consignments totaling 1.1 million tons to Afghanistan.

Work on Chabahar will take about a year to finish and will increase the port's capabilities from 2.5 million tonnes to 8 million tons. India's investments in Chabahar threaten Pakistan on two fronts. Firstly, India is muscling out Pakistan's exports to Afghanistan and secondly we lose out on Afghanistan's transit trade since India is one of the top exporters to Afghanistan that utilizes Pakistan's routes.

“Alarm bells should be ringing,” says PAJCCI Chairman Zubair Motiwala. The government must realize the value of trade with Afghanistan. Already half the wheat flour mills and related businesses have closed down in Peshawar while we take steps to increase the trade deficit rather than decrease it, he said. “The government needs to understand that there is no difference between dollars coming in from the US, the EU or Afghanistan. This is our market that we are losing out on”, he added.

He explained that in the past, when borders have been closed he had talked to various people in power, from ISI to the ministries and the embassies to have the issues resolved. Yet, the problems persisted and members of PAJCCI lost fortunes as their perishables rotted away in containers.

India is taking advantage of Pakistan’s laxness and lack of concern to build and solidify its trade route. If the current state of affairs continues, Pakistan will lose Afghanistan's growing and fertile market. And once lost, it will be almost impossible to recover due to India's superior quality and trade facilitation efforts.