Economy Apr 23, 2012
In a cavernous warehouse in north India, workers grade and blend mounds of tea for shipping to Dubai, Europe, Singapore - just about anywhere around the globe, except for the country right next door, Pakistan.
Decades of conflict have decimated trade between the two nuclear armed South Asian neighbors. Now, with peace efforts between the rivals stalled, officials are hoping that trade could lead the way to easing tensions.
They have promised to throw open their economies to each other by the end of the year and have already liberalized some commercial ties. A new border depot for trade was inaugurated recently.
India's Commerce Minister Anand Sharma said that investment "can form the basis for building political trust."
The commercial thaw is welcomed by traders who have deep historic and cultural ties but who were cut off from each other when India, a former British colony, was split into two countries upon independence in 1947.
The three wars they fought did not dampen Pakistanis' craving for India's green tea nor Indians' longing for Pakistani dates and nuts.
So, Indian traders routed their Pakistan-bound products by ship via Dubai in a 28-day journey that is 40 times as expensive as trucking it over their shared land border.
And Rakesh Arora, one of north India's biggest tea suppliers, can't sell to the world's second largest tea-buying market barely 30 kilometers (20 miles) away from his warehouse. Instead, Pakistan buys tea from faraway Kenya.
The two sides hope that they can quadruple trade that reached $2.8 billion last year by setting aside their competing claims to the Kashmir region and other thorny disputes to focus on restoring economic links.
"What India and Pakistan are doing is long overdue," says Rajinder Goel, president of the Amritsar Tea Traders Association.
In recent months, Pakistan drastically reduced the number of Indian products barred from the country and said it will eliminate the bans completely by the end of the year. It also said it planned to grant India "Most Favored Nation" trade status, which would reduce tariffs. New Delhi gave that status to Pakistan in 1996.
India said this month it would lift the ban on Pakistani investments here, held a Pakistani trade fair in the capital and is talking of exporting electricity and petroleum to the energy-starved country. Both countries' central banks are exploring opening branches across the border.
Indian Foreign Secretary Ranjan Mathai said they were close to an agreement on visas to make it easier for business leaders to cross the border and stop forcing them to report to police.
And India unveiled a new customs depot at the Attari border, which separates India's Punjab region from the Pakistani Punjab.
In the 100 acre (40.47 hectare) hangar-like warehouse the size of two football fields, neatly stacked rows of cardboard cartons filled with dried fruit and nuts stretched to the ceiling awaiting customs checks. An army of blue-uniformed porters waited to load them onto trucks for the vast Indian market.
Nearby, trucks from Pakistan unloaded cement and building supplies bound for India's booming construction industry.
Like other produce traders, Om Prakash Arora Lati had faced immense losses when his fruit and vegetables rotted in the intense summer heat due to delays at the old checkpoint.
"Now we can clear customs formalities in hours instead of days," said Lati, president of the Indo-Pak Exporters Association.
Rajdeep Singh Uppal, who has been trading with Pakistan for nearly two decades, said the number of trucks that crossed the border jumped in the very first week of the new customs post.
It has "smoothed the movement of trucks from this end," he said. "Now we want Pakistan to scale up its facilities."
Indian merchants also hope to use the land crossing to reach markets in Afghanistan, Iran, Iraq and across Central Asia.
"The possibilities are endless," Uppal said.
The trade optimism has also spurred demands for more crossings along the 2,900 kilometer (1,800 mile) border, and at least four possible sites have been identified, in the Indian states of Rajasthan and Punjab.
The decision to set aside differences and push ahead with commerce is a formula India has employed before. Despite their own border dispute, trade between India and China has boomed over the last decade.
However, longtime Pakistan watchers remain cautious. Another attack reminiscent of the 2008 siege of the Indian city of Mumbai by Pakistan-based gunmen could push the countries back to the brink, analysts say.
There are also doubts about how far Pakistan's military will let its civilian leadership go in restoring ties.
"Despite the presence of a civilian regime in Pakistan, it is more than apparent to most observers where power remains ensconced," Sumit Ganguly, a political science professor at Indiana University, wrote in the Asian Age newspaper.
But Pakistan's army has sent its own signals it wants better relations, with army chief Gen. Ashfaq Parvez Kayani calling for the demilitarization of the disputed Siachen Glacier and for greater emphasis on development and peace.
When Pakistan's commerce minister opened his country's trade fair in Delhi this month, Ghazala Rahman, a Pakistani furniture designer, lamented it was the first time in 35 years her country's top business official had come.
"We share so much - the same language, the same culture, the same history. I see it as 35 wasted years," Rahman said.
Haseeb Bhatti, a surgical instrument maker from the Pakistani city of Sialkot, said the two sides have to learn to trust each other again after decades of conflict.
Yet, Bhatti speaks with nostalgia and hope.
"On clear days, when I look at the skies above Sialkot stretching as far as Jammu in India, I wonder, who raised these borders and caused these divides?"
More From R Jagannathan.