Author : Oommen C. Kurian

Expert Speak Health Express
Published on Sep 07, 2019
Pakistan’s knee-jerk decision to suspend all trade relations with India could have only created a barrier of access to medicines for the Pakistani population.
Pakistan's quick U-turn on its trade ban on pharmaceutical products with India

On 7 August 2019, in a meeting with his national security committee, Pakistan’s Prime Minister Imran Khan took the decision to suspend all bilateral trade with India. The meeting took place after India’s decision to abrogate Article 370 and divide the state of Jammu and Kashmir into two Union Territories named Jammu and Kashmir and Ladakh.

However, just four weeks into the imposition of the trade ban, on 2 September 2019, the Ministry of Commerce and Textile Industry, Government of Pakistan issued a statutory regulatory order (SRO) that exempted therapeutic products regulated under the Drug Regulatory Authority of Pakistan from the trade ban, while the ban on all other goods still remain.

This article explores the extent of pharmaceutical trade between India and Pakistan over the last five years in order to look at the facts underlying this sudden U-turn in the face of heightened tensions between the two countries, and the continuing tirade aimed at India from Pakistan’s political elite.

India is a major trading partner to Pakistan and according to Pakistan’s economic survey for the years 2018-19, India ranks sixth in terms of imports. In 2018, Pakistan’s pharmaceutical imports from India were estimated at over $62 million.

Data from the UN Comtrade shows that the proportion of Indian pharmaceutical exports has grown significantly in the recent years, and is currently over 7% of Pakistan’s overall pharmaceutical imports (Graph 1). Indian pharmaceutical exports to Pakistan are around 3% of its overall exports in terms of the USD. More significantly, Indian pharmaceutical exports to Pakistan are just 0.4% of India’s overall pharmaceutical exports.

Graph 1 — Pakistan’s Pharmaceutical Imports from India (USD Thousand)

Source: Comtrade

On the other hand, India too imports pharmaceutical products from Pakistan. However, the numbers are almost next to nothing when compared to Pakistan’s pharmaceutical imports from India (Graph 2). Data suggests that India has zero dependency on Pakistan in terms of medicines. Pakistan is not a significant trading partner for India.

During the years 2017 and 2018, overall trade between both the nations was no more than $2.4 billion, accounting for only 0.31% of India’s total trade. Compared to the trade that India recorded with the US and China at $87.96 and $87.07 in 2018-19, trade with Pakistan seems small — other than for a handful of products like cotton. Event in this context, pharmaceutical imports from Pakistan have been insignificant.

Graph 2 — India’s Pharmaceutical Imports from Pakistan (USD Thousand)

Source: Comtrade

As per reports, Pakistan’s pharmaceutical industry is riddled with multiple challenges including over-the-counter sale of counterfeit products and a massive decline in the number of manufacturing companies of pharma products — which leaves the country no choice — but to import a considerable proportion of its pharmaceutical requirements. Therefore, Pakistan’s knee-jerk decision to suspend all trade relations with India could have only created a barrier of access to medicines for the Pakistani population.

China, who has been supportive of Pakistan during the Kashmir crisis, is a major player in the pharmaceutical industry and holds a significant share in the world pharmaceutical market. However, in the year 2018, China ranked only 9th among pharmaceutical import partners for Pakistan — while India ranks 5th.

Other than India, most of Pakistan’s imports of pharmaceutical products come from Germany, Switzerland, France, Belgium and a handful of other Western nations along with China as well. Clearly, Pakistan’s efforts to substitute Indian pharmaceutical imports with imports from these countries, over the last few weeks, were not as successful as anticipated.

Keeping in mind the above reasons, and the unnecessary human costs Pakistan’s reckless decision could have caused, the reversal of trade ban on pharmaceutical products with India has certain logic and reason. Reportedly, members of the regulatory authority feared that there would be access constraints and inflation in prices of medicines, as a large chunk of medicines and their APIs are imported from India. Finally, better sense prevailed and trade ban on pharmaceutical products was lifted.

In view of the data on India’s hugely favourable terms of pharmaceutical trade with Pakistan, however, the trade ban was in effect just an import ban of Indian medicines.

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Oommen C. Kurian

Oommen C. Kurian

Oommen C. Kurian is Senior Fellow and Head of Health Initiative at ORF. He studies Indias health sector reforms within the broad context of the ...

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Livi Gerbase

Livi Gerbase

Livi Gerbase Institute of Socioeconomic Studies (INESC)

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