Objectively speaking, there is no reason why the trading route into PoK and Pakistan should be blocked (leaving aside the current emotional hysteria), even if it is across an international (or disputed) border. The very limited trade between India and Pakistan is one of the most important downsides to the political conflict. Consider this: the value of India’s exports to Pakistan was just 1.8 billion dollars in 2007-08 which is just over 1 per cent of India’s total exports. India exports more to Bangladesh (2.5 billion dollars in value); more even to tiny Sri Lanka (2.7 billion dollars). The figures on imports are even more dismal —Indian imports from Pakistan were valued at a miniscule 287 million dollars in 2007-08. Part of the problem of Indo-Pak trade is in the fact that it is often routed cumbersomely through Dubai. Proposals to open more overland routes to trucks — including between Srinagar and Muzaffarabad are stuck in bureaucracy and politics.

There is, thus, plenty of potential, not only for Kashmir but also for the rest of India in trading with Pakistan. Even beyond trade, there is great potential for Indian business to invest capital in resource-scarce Pakistan. It seems absurd that India is now the second biggest foreign investor into geographically distant UK, but completely irrelevant in neighbouring Pakistan, whose 170 million people are a potentially giant market. The new Pakistan government in its latest trade policy has for the first time initiated discussion with three Indian firms—Tata, Reliance and Essar—on possible investment in the power sector. It has also opened discussion on possible investment into the manufacture of CNG buses. These are welcome but are far too little in the larger context. Pakistan should grant, and soon, India a most favoured nation (MFN) status in trade, which is a fundamental pillar of the international trading system.

... contd.