Context: In the wake of the Pahalgam terror attack, India has decided to downgrade diplomatic ties with Pakistan and close the Integrated Check Post (ICP) at Attari border with immediate effect. This is set to halt cross-border trade worth Rs 3886 crores between India and Pakistan.
Relevance of the topic:
Prelims: Location of Attari-Wagah Border.
Mains: India-Pakistan bilateral relations: trade relations
Location: Attari-Wagah Border
- Attari-Wagah Border is the international border between India and Pakistan, located near the towns of Attari, Punjab in India and Wagah in Pakistan.
- Attari is India’s first Land Port and the only permitted land route for trade with Pakistan. Located 28 kilometres from Amritsar, spread across 120 acres and directly connected to National Highway-I, the check post has played a crucial role in cross-border trade, particularly in imports from Afghanistan.
- The border checkpost is most famous for the Wagah Border Ceremony (Beating Retreat Ceremony). While ceremonious in nature, the drill is steeped in symbolism, representing both rivalry and mutual recognition.
India-Pakistan Trade
- In the last five years, the India-Pakistan trade has declined significantly, from Rs 4370 crore in FY19 to Rs 2257 crores in FY23. India imposed a 200% duty on Pakistani goods after the Pulwama attack in 2019.
- The trade witnessed a recovery in FY24, reaching Rs 3,886 crore, the highest in the last five years.
Trade via Attari Border
- The Attari-Wagah land route was first opened in 2005. The ICP at Attari was inaugurated in 2012, with provisions of facilities for fast and cost-effective land trade.
- Major exports from India to Pakistan through this route: soybeans, poultry feed, vegetables, and plastic products.
- India imports goods like dry fruits, dates, gypsum, and cement from Pakistan.
Impacts of the the Attari Border Closure on India and Pakistan
Impacts on India:
- Many small-scale industries depend heavily on cross-border exports, and the suspension of trade is expected to cause both direct and indirect job losses—affecting transporters, porters, labourers, and small business owners associated with the trade supply chain.
- Closure will impact Punjab's economy, particularly in the Amritsar-Attari belt. Straw reapers and cotton yarn are key exports from Punjab via the Attari-Wagah route.
- Afghan imports into India and vice versa, many of which pass through Pakistan via the Attari-Wagah route, may also face logistical challenges.
Impact on Pakistan:
- Pakistan's economy is struggling with high inflation, political instability, and a downgraded growth forecast of 2.6% by the IMF. The closure of the Attari ICP will worsen these issues, especially for traders dependent on the land route for exports to India.