Pakistan defers plans to resume imports from India

Pakistan’s government has deferred on plans to allow limited imports of sugar, cotton and wheat from India after a political backlash against the move.

Interior Minister Sheikh Rashid Ahmed told reporters on Thursday the decision had been "deferred" until New Delhi restored Indian-administered Kashmir's special status.

The government's economic coordination committee earlier said on Wednesday that import permits would be approved in a bid to rein in rampant inflation, but politicians criticised the apparent thaw in relations with their rival neighbour.

Pakistan Finance Minister Hammad Azhar had said the government made the decision "in the interest of the people", when asked why trade was resuming despite no change in New Delhi's position on Kashmir, a divided territory claimed in full by both countries.

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Kashmir conflict

Pakistan was one of the leading buyers of Indian cotton until 2019, when Islamabad banned imports of goods from India after New Delhi revoked the special status of its portion of the Kashmir region that both countries claim.

Both countries withdrew their top diplomats, and consular staff were expelled or withdrawn.

There has been a frosty stand-off since, but signs of rapprochement recently have included Indian Prime Minister Narendra Modi and his Pakistani counterpart Imran Khan exchanging letters, as well as a resumption of talks last week on the use of resources from their shared Indus River.

Bloomberg reported last week that the United Arab Emirates had brokered secret back-channel talks between the two South Asian nations.

Asked at a press conference Wednesday why the trade was resuming despite there being no change in New Delhi's position on Kashmir, Pakistan Finance Minister Hammad Azhar said the government had to make decisions "in the interest of the people".

"If opening trade with some country lessens burden on the pocket of an ordinary person, there is no harm in it," Azhar told a news conference in Islamabad.

"The price of sugar in our neighbour India is quite a bit lower than Pakistan."

"Cutting trade ties with India was an emotional decision and now the resumption of these ties is an economic compulsion," Farrukh Saleem, an economist and financial and political analyst, told AFP.

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Price checks

Azhar only took up his position on Tuesday after Khan sacked his predecessor for failing to check runaway inflation.

Meanwhile, the International Monetary Fund resumed its $6 billion bailout programme with Pakistan, which was paused after the coronavirus outbreak, sending an installment of nearly $500 million this week.

Pakistan went on to make its first foray in nearly five years into the global treasury market, with an oversubscribed issue of $2.5 billion in Eurobonds.

"Inquiries for sugar and cotton are going on for price checking," said the India head of a global trading firm, who declined to be identified due to company policy.

Not everyone had welcomed the move. The chairman of the Cotton Ginners Forum in Pakistan, Ishan ul Haque, said an unlimited import of cotton and yarn from India would affect the country's agriculture and cotton industry.

Given the expected arrival of the new cotton crop in June, he said there should be a limit on imports so price stability could be ensured.

The trade is open until June 30 for local private sector to import the sugar while cotton and cotton yarns could be brought in by both the private companies and Pakistan's government bodies.

New Delhi is yet to make any comment on the decision.

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