The chamber analysis says the bilateral trade between the two countries during the first half of the year was $ 1.1 billion and may further dip by 20% during the year 2012-13. The on-going atmosphere will have its own repercussions and will be reflected on cross-border trade. Also, Indian businessmen and small merchants who were contemplating trade relations with Pakistan have put their plans on hold," reveals the ASSOCHAM paper.

In an analysis on Indo-Pak trade & Its Impact on India', the ASSOCHAM Secretary General, ASSOCHAM Mr. D. S Rawat said that the current disturbances on the borders in Pakistan has been observed on India's cross-border trade and Indian businessmen and small merchants who were contemplating to set up trade relations with it have now holding their plans.

According to estimates, bilateral trade in 2011-12 between the two countries had recorded a decrease of 14% and stood at US$ 1.9 billion. India's export to Pakistan in the same period was US$ 1.5 billion which shows a decrease of 25% against US$ 2.0 billion in the fiscal 2010-11. Imports from Pakistan during the same period were worth US$ 0.4 billion, an 48% increase over the 2010-11 of US$ 0.27 billion.

ASSOCHAM apprehends that it would not only affect India-Pakistan trade but the entire intra-trade SAARC trade would be affected since most of the countries in the region are inter-dependent in various items.

Pakistan supplied chickpeas, pulses, grains and sugar when these were short of supply in India and on the other hand, India supplied onions, potatoes, pulses and other food items, adds Mr. Rawat.

ASSOCHAM believes that the route towards better relations between India and Pakistan has increased the trade in the last few years. Not only are there large trade related advantages to governments and consumers in both countries but entire South Asian region gains from the harmony of two countries with increased trade and commerce.

The study further reveals that Pakistan can be greatly benefited from the import of agricultural produce like wheat, spices, tea and other edibles to meet production shortfalls at competitive prices.

Pakistan mainly export products such as cotton yarn and textiles, leather products, surgical instruments, electrical fans, water coolers, paper, vegetables and fruits.

The disturbances on Indo-Pak borders should not become deterrent to sustain momentum that has been created through various CBMs during the last one year and rather both the countries should initiate action through improved business environment and may set up an institutional mechanism to guarantee each others investments.

In 2011, Pakistan's total outward FDI low was only US$ 62 million while India had US$ 14.8 billion. Further, Pakistan's inward FDI flow for 2011 was US $ 1.3 billion while that of India was US$ 31.6 billion.

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