Ease down in Indo-Pak tensions to benefit Chemical, Cement sector, says analyst

The recent reports of de-escalation of tensions between Pakistan and India have been dubbed a positive development for the country’s economy by the financial expert.

Days ago, Pakistan's Army Chief Gen. Qamar Javed Bajwa in his address asked India “to bury the past and move forward” while stating that the military was ready to enter talks to resolve “all our outstanding issues" - which came a day after Prime Minister Imran Khan called for a resolution on the Kashmir Issue, which he described as “the one issue that holds us back".

Whereas, Indian PM Narendra Modi sent a tweet wishing PM Imran Khan well after he was diagnosed with Covid-19, in a sign of de-escalation in tensions between the neighbors.

“These developments have raised prospects of better engagement on economic matters as well,” stated AKD Securities in its recent report.

The report highlighted that amid a rise in tension, India revoked the Most Favored Nation (MFN) status granted to Pakistan in February 2019, whereas Pakistan retaliated by imposing an import ban on Indian goods in August 2019.

These measures lead to a massive decline in trade with India falling to $403 million in FY20 from $2.2 billion in FY08.

“Improving trade prospects is beneficial particularly for cement, chemicals, pharma, and textiles in our view,” stated the report.

The report stated that cement exports were among the first ones to take a hit from worsening Indo-Pak relations as India imposed a significant duty on the import of cement. “With improving relations, a reduction in duty can also be on the cards,” it said.