Opinion India can act today to shape tomorrow’s terms of connectivity with Pakistan

Atal Bihari Vajpayee and Manmohan Singh’s strategy of economic interdependence to soften the India-Pakistan border looks like a distant dream. It is difficult to think of a peacetime period when India and Pakistan were less connected than today. New Delhi and Islamabad have exhausted the fuel that drove their engagement in the 2000s. Most of those initiatives now lie in ruin, with connectivity at a 20-year low.

The World Bank estimates India-Pakistan trade potential to be $37 billion, compared to the actual $2.4 billion in 2017-18. This has now further declined to a mere $400 million. While the world negotiates supply chains and trade deals to integrate different regions, India and Pakistan have created a commercial abyss that divides South Asia.

There has been no major investment in border infrastructure for almost 10 years since India opened its first Integrated Check Post (ICP) at Attari. There are now over 60 border crossings with northern and eastern neighbour countries, but only one formal crossing with Pakistan. Of the 23 ICPs India plans to build by 2025, none is located on the border with Pakistan.

Direct travel between both neighbours became virtually impossible even before the pandemic. The stagnation of the South Asian Association for Regional Cooperation wrecked agreements on motor vehicles connectivity and a joint satellite. Plans for an integrated power grid and energy interdependence have fizzled out, including the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline.

Pakistan seems content with this growing connectivity gap. The civilian leadership has avoided any initiative and has let the army handle India. Pakistan’s geoeconomic priority now lies towards the north and west, especially through the China-Pakistan Economic Corridor. From Islamabad’s perspective, there are few incentives to connect with India towards the east.

Pakistan’s economic disinterest and growing role as China’s proxy pose a regional challenge for India. After two failed attempts, Prime Minister Modi realised the diplomatic futility and domestic costs of reaching out to Islamabad. India’s geoeconomic focus is now on the east and south, under the Act East and Neighbourhood First policies. New Delhi’s risk-averse policy has kept Pakistan in the freezer and tried to transcend the region by investing in global and Indo-Pacific partnerships.

Ignoring or isolating Islamabad has brought some benefits, but this tactic will not work forever.

India’s rising global ambitions may get bogged down by Pakistan’s appetite to disconnect from South Asia and keep the border as hard and securitised as possible through asymmetric warfare and cyclical crises.

So what can Delhi do even if Islamabad does not reciprocate? India should explore unilateral measures that fulfil three conditions. First, the initiative must not be politically salient at home, in order to limit domestic opposition. This means following the strategic sequencing of the 2000s by not involving Kashmir.

Second, the measure should offer spillover incentives that target specific Pakistani economic constituencies, especially sectors located in the border regions and industries that would benefit from India as an export market. This includes trade, transportation and labour segments that are hurting from Islamabad’s decision to suspend trade.

Finally, any non-reciprocated initiative should be promoted diplomatically in order to place the ball in Pakistan’s court. This will expose Islamabad to international pressure and call its bluff, for example when its National Security Policy proclaims that “shared economic opportunities are the cornerstone for achieving prosperity in Pakistan and the region.”

Two unilateral initiatives satisfy these conditions. One would be for India to lower import duties on Pakistani goods. After the Pulwama attack, Delhi withdrew the Most Favoured Nation status and raised the basic customs duty to 200 per cent. Reversing this would send a clear signal, and also put the onus on Islamabad to revise its own decision to suspend trade. Trade-intensive sectors would likely mobilise to push Islamabad to reciprocate. This includes the textile industry, which constitutes Pakistan’s largest global export and was heavily dependent on cotton imports from India.

A second option is for India to unilaterally improve cross-border infrastructure. New Delhi should massively finance the development of its last-mile road, rail and air network in the peripheral border areas of Gujarat, Rajasthan and Punjab. This will not only spur domestic development but also attract attention from the Pakistani borderland economies. New ICPs could be set up along the border at Hussainiwala, Munabao, Suchetgarh or Nadabet. At the cost of approximately Rs 150 crore, each new ICP is a bargain investment in the geoeconomic future of India’s borderlands.

Trade incentives, border infrastructure or any other such unilateral initiatives are simple, low-cost ways for Delhi to reverse the lost time and rising costs of India-Pakistan disconnectivity. Even if they fail to immediately alter Pakistani behaviour, they will still help India reap the benefits of trade and mobility when the sunny day of political normalisation finally arrives.

This column first appeared in the print edition on March 31, 2022 under the title ‘Let’s be neighbourly’. Xavier is Fellow and Sinha is Research Associate, Centre for Social and Economic