Uae A Clandestine Route For Indian Exports To Pak

With Islamabad still reluctant to open up trade with India, Dubai has emerged as a major centre for clandestine Indian exports to Pakistan.

The Pakistani government order last week allowing import of an additional 14 industrial raw materials and products from India is unlikely to reduce the importance of the United Arab Emirates (UAE) as the transit point for clandestine Indian sales to Pakistan.

The Dubai route might still be cheaper for Indian exports to Pakistan, a wholesale trader in Dubai said. Indian exports to Pakistan through Dubai have grown rapidly over the years and this will continue because Pakistan has not given India MFN (most favoured nation) status, he said.

 

Pakistan recently increased the number of items that can be imported from India to 601 from 587 earlier. But not many of them are actually imported. Many of these items are sent to Pakistan by Indian traders through Dubai with Indian and Pakistani traders working closely together here.

Tyres constitute one of Indias biggest exports to Pakistan, now covered in the additional 14 items sanctioned for direct import. The other items that Pakistani commerce minister Ishaq Dar said would be cleared for direct import include cotton and yarn, nickel cadmium batteries, cutting dies for shoes, carbon brushes, anti snake-bite venom serum, hides and skins, wood, whole chillies and lightweight steel rail. Dubai is by far the largest trading centre among the seven emirates. In 1996-97, UAE imports from India added up to about $1.7 billion, making India the fifth largest exporter to the Gulf state after China, Japan, the US and South Korea.

A large part of these were meant for re-export to Pakistan. Indian goods are also re-exported from Dubai to Iran, Saudi Arabia and the Central Asian Republics.

In 1995, Dubai imported Rs 200 crore worth of plastic and rubber products from India. Official figures say that Dubai also imported Rs 1,220 crore worth of goods labelled `textiles and articles. Many of these articles were left unnamed to cover re-export.

The re-export of Indian goods to Pakistan is done in two ways, according to a trader. Many of the Indian goods are marked actually for export to Afghanistan, but most of them never get beyond Peshawar, he said.

The other way is that they are simply stamped as products of another country, or of the UAE, and exported to Pakistan, he explained.

Dubai agents expect to continue trading in goods cleared for direct export as well because only we know the markets of both countries, the wholesaler said.

The trade route might change for goods cleared for direct export, but the traders will remain the same, he said.

The other Indian products imported into Dubai for re-export to Pakistan include engineering goods like pumps, motors and tools, automobile spare parts, consumer goods like sewing machines and bicycles, and base metals like aluminium.

India exported Rs 676 crore worth of machinery and appliances and 4.5 billion rupees worth of base metals and associated products to Dubai in 1995. The sale of Indian machinery, base metals and chemicals has been rising rapidly.

But there is growing demand in the UAE itself for imports from India. Tata buses and trucks are a common sight in the UAE; Indian textile machinery is being increasingly bought by garments factories here; and the demand for Indian consumer goods such as kitchen appliances and fans is rising. But the demand in the UAE is limited as it has a population of only 2.7 million.

India too is primarily a centre for re-export of goods imported from Dubai. India imported Rs 250 crore worth of goods from Dubai in 1995 for sale in India, and another Rs 920 crore worth of goods that were marked for re-export to other countries.

The import bill of Dubai increased by 4.6 per cent in 1995. The import of goods from India the same year rose 13.5 per cent. The growth of Indian exports in 1994 from the previous year had been 3.25 per cent.