A trade body of Pakistani employers have asked the Imran Khan-led government to allow in local markets Indian goods that have already arrived at Pakistan’s airports or seaports

The Employers’ Federation of Pakistan said that while it supported the decision to suspend trade with India, it urged the government to allow the Indian goods which had reached airports or seaports into local markets, reported The Dawn.

They also feared that the life-saving drugs, which are imported from India, might vanish and urge the government to allow such arrangements until an alternative source was set up.

EFP vice president Zaki Ahmed Khan said in a statement on Saturday that the manufacturers of Pakistan fully supported the decision of the government to suspend all trade with India.

"This has sent a strong and favourable message to the business community to source their imports and exports from countries that are not inimical to the sovereignty of Pakistan," he said.

In a letter sent to the DG Trade Policy at the Commerce Ministry, the Lahore Chamber of Commerce and Industry (LCCI) has asked him to save the importers from losses and to also allow them to bring via sea their consignments that were already on way through the railway.

1. Pak Staring Down Barrel

Pakistan has been staring down the barrel of a balance of payment crisis for more than a year. The country depends on India for the imports of essential food items, such as onion, tomatoes and chemicals. And with EiD around the corner, the common man in Pakistan could end up burning a hole in the pocket.

The impact of Pakistan's move would be insignificant on India, in consideration to the fact that the imports from Pakistan had declined by 92 per cent to USD 2.84 million in March this year when India had imposed 200 per cent customs duty on all goods imported from the neighbouring nation.

It may be noted that India had revoked the MFN (most favoured nation) status to Pakistan in the aftermath of the Pulwama attack in February. The country has repealed a security exception clause of the World Trade Organisation (WTO) to withdraw the status. Under the MFN pact, a WTO member country is obliged to treat the other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

2. India Shuts Down Trade Talk With Pakistan

The problem does not end here for Pakistan. In April, the Indian government decided to suspend all cross-LoC trade with Pakistan after receiving reports that the routes were being used by elements in Pakistan to push weapons, narcotics and counterfeit currency into India.

Following the Pulwama attack, inputs have also been received that in order to evade the consequent higher duty, LoC trade is likely to be misused to a much larger extent.

On July 22, data from the State Bank of Pakistan revealed that the country's exports to South Asian neighbours had dropped 14 per cent to USD 2.672 billion in the last fiscal year of 2018-19 from USD 3.104 billion in the previous year, according to News International.

The decline was due to the dip in exports to three neighbouring countries namely India, Afghanistan and Iran.

Pakistan's exports to India was pegged at USD 312.032 million during the last fiscal year, compared with USD 419.773 million in June-July 2017-18. These figures came after India imposed 200 per cent customs duty on Pakistani imports and the stripping of the MFN status by New Delhi.

3. Price of Essential Trade Items Soar

"Strained political relations, tariff and non-tariff barriers and high cost of doing business also drag on Pakistan's exports to India. An ongoing political tension is impeding Pakistan's exports to Afghanistan," an analyst was quoted by News International as saying.

The prices of essential food items generally soar around a major festival like Eid, due to the increase in their demand. Wednesday's decision by Pakistan to suspend trade relations with India would mean that the supply of these items would further reduce. The impact is expected to be both short and long term.

Pakistan Prime Minister Imran Khan, who was elected to power last year, on an anti-corruption plank and a promise to implement austerity measures amid a crumbling economy, has struggled to contain the rise of prices of food essentials and fuels, leading to discontent among the masses.

Earlier this month, the Pakistani government hiked the prices of petrol and diesel by Rs 5.15 per litre and Rs 5.65 per litre respectively, even as the country is facing a severe financial crunch. While petrol will cost Rs 117.83 a litre, a litre of diesel will cost Rs 132.47.

Apart from the hike in petrol and diesel prices, the rates of kerosene oil and light diesel have now become costlier by Rs 5.38 and Rs 8.90. The new prices for diesel, kerosene and light diesel now stands at Rs 132.47 and Rs 103.84 respectively.

The move comes after the government had ordered the reduction of the prices of 'naan' and 'roti', the country's staple and hugely popular flat breads. Currently, the rates of naan are ranging between Rs 12 to Rs 15 in different cities across Pakistan, while Roti is available at Rs 10 to Rs 12 a piece.

The new prices which are yet to be revealed are expected to be substantially lower than the current ones.