In a recent parliamentary session, Harsimrat Kaur Badal of the Shiromani Akali Dal (SAD) advocated for reopening the Attari-Wagah and Hussainiwala borders for trade with Pakistan. This plea comes at a critical juncture, intertwining economic aspirations, regional stability and political strategy. This article explores the historical significance of these trade routes, Punjab’s current economic scenario and the benefits and challenges of resuming cross-border trade.
Historical context of trade routes
During the Mughal era (1526–1857), Punjab served as a crucial trade corridor connecting South Asia to Central Asia and beyond. The Grand Trunk Road, a major artery expanded by the Mughals, facilitated extensive trade across the region. Lahore, a principal city of Punjab, became a bustling commercial hub where goods such as textiles, spices and precious metals were widely traded. Historical records from travelers like Ibn Battuta and Mughal chroniclers highlight the prosperity of the region, driven by its strategic location and robust trade networks.
The Sikh Empire under Maharaja Ranjit Singh (1801–1839) further cemented Punjab’s role as a vital trade centre. Ranjit Singh established a stable and prosperous state with a well-maintained infrastructure and a strong military presence. The Lahore Darbar became a prominent trade hub, attracting merchants from across Asia and Europe. The Sikh Empire’s policies facilitated trade in commodities such as shawls, carpets, horses, and grains. Accounts from British and European travellers of that time document the bustling markets and the economic vibrancy of Punjab under Ranjit Singh’s rule.
Also read: Why Cross-LoC Trade Must Resume After the COVID-19 Crisis
Post-Partition trade dynamics
After the partition in 1947, the Hussainiwala–Lahore border via Ferozepur and Kasur continued its trade function until the 1971 war, and closed aftermath of the 1971 war. This route held strategic importance, linking India to Afghanistan through Pakistan. Key imports included dry fruits and fresh fruits, further reaching Delhi, while India exported textiles, betel leaves, and other goods to its trade partners. Despite the close economic interdependence between India and Pakistan post-partition, ongoing hostilities and political-military tensions hindered growth, particularly affecting the Punjab region on both sides.
The closure of the Hussainiwala-Lahore border in 1971 marked a significant economic setback. While the Attari-Wagah border remained functional intermittently, trade got completely halted following the abrogation of Article 370, with Pakistan imposing and India continuing the suspension. The disrupted long-standing trade routes and severed economic ties, leading to economic challenges that Punjab continues to grapple with today. The embargo not only severed trade and people-to-people exchanges but also significantly reduced government revenue used to gain from licenses, customs duties, and storage fees etc. This loss impacted warehousing corporations and transport services, directly affecting the livelihoods of small traders, wholesale suppliers, and the hospitality industry in border cities.
Indian trucks queue up to leave from Bab-e-Tijarat i.e. The Trade Gate on the Pakistani side. Photo: flickr.com/Asian Development Bank/ CC BY-NC-ND 2.0
The Poonch-Rawalkote trade route in Jammu and Kashmir offers a valuable case study. Operational since 2005, this route has significantly boosted the local economy by enabling the exchange of goods and fostering a sense of normalcy and cooperation in a conflict-ridden region. Studies, including those by the United Nations Development Programme (UNDP), highlight the economic benefits brought about by this trade route, suggesting similar potential for the Attari-Wagah route.
Current economic scenario in Punjab
Today Punjab’s economy faces significant challenges. Once known as the “Granary of India,” the state now struggles with economic stagnation and rising unemployment. Data from the Centre for Monitoring Indian Economy (CMIE) indicates a troubling unemployment rate, exacerbated by limited industrial growth and declining agricultural profitability. The closure of cross-border trade has compounded these issues, cutting off a vital economic artery. Farmers and traders in border areas have particularly felt the economic pinch, leading to increased calls for reopening trade routes.
A report from the Centre for Research in Rural and Industrial Development highlights that the balance of trade has historically favoured India. It noted that the bilateral trade potential in 1995 was estimated at $6.693 billion, and a World Bank report (Kathuria 2018) projected this figure could reach $37 billion. However, the actual formal trade between the two countries before the embargo was only $2.2 billion to $2.6 billion, far below its potential due to restrictions on many items and limited trade to necessary products like medicine and food items. Clearly, the closed trade routes are not benefiting Punjab or India as a whole, despite India’s trade edge.
Security challenges and cross-border terrorism
Security concerns pose significant hurdles to translating this dream into reality. Incidents like the recent infiltration of terrorists involved in the Kathua attack, reportedly entered through Punjab, underscore the risks associated with cross-border trade. Ensuring robust security measures is paramount to prevent such incidents and maintain peace. Intelligence reports and security analyses indicate that without stringent border control and monitoring, the risk of cross-border terrorism remains high.
Additionally, Punjab’s current law-and-order situation does not support reopening trade routes. Border cities like Ferozepur and Fazilka are already deeply grappling with illegal cross-border trading. Post 1971, Pakistan by way of a non-military proxy war opted for the Punjab route to hollow out. No matter which government reins in Punjab, the illegal supply of drugs and arms has only increased over the years and none could knock the heel of this issue. Items such as counterfeit currency, large quantities of drugs, and arms are regularly smuggled through the Hussainiwala border. These issues highlight the need for a balanced yet proactive approach that addresses both economic aspirations and state and national security imperatives.
Peace as a precondition for trade
Harsimrat Kaur Badal, in line with her party’s 2024 manifesto and election promise, appealed in the parliament to reopen the Attari-Wagah and Hussainiwala borders. Her call for reopening these borders cannot be divorced from the necessity of peace. Trade cannot flourish in an environment fraught with violence and mistrust. Therefore, any move to resume trade must be accompanied by diplomatic efforts and stringent security protocols to mitigate cross-border terrorism. Historical precedents, such as the Indo-Pak peace processes of the early 2000s, show that trade and peace negotiations often go hand in hand.
Local demands and political strategy
Badal’s statement reflects broader demands from local leaders in Punjab’s border villages, who have long advocated for the resumption of trade to revive their economies. The Kartarpur Peace Corridor in 2019 provided a glimmer of hope for locals, suggesting the possibility of reopening borders during Punjab’s economically challenging times. However, recent years have seen heightened political tensions between India and Pakistan and growing instability, leading locals to doubt the feasibility of such promises, often reiterated by leaders during election seasons.
For the Akali Dal and the Badal family, this issue also presents an opportunity to regain political relevance in Punjab. Having lost traction in recent years, championing a cause that resonates with the economic concerns of their constituents could be a strategic move to reclaim influence. Political analysts note that the Akali Dal’s support base has eroded due to various factors, including their stance on agricultural reforms and alliance dynamics.
In their 2024 election manifesto, the Badals highlighted the disparity in trade opportunities, noting that if Gujarat ports can facilitate Indo-Pak trade, so should land borders. This stance, however, overlooks the critical security and instability issues brewing in Punjab and its adjoining highly sensitive Jammu and Kashmir.
Border management and international trade fall under the Union government’s jurisdiction, while security is a Punjab state responsibility. Although, the demand for reopening border trade is genuine but requires the centre and state government to first ensure effective law and order and curb cross-border illegal activities, such as drug and arms smuggling via road and air (drones). The threat of drugs is a real concern for India as 80% of illegal drugs inflow into India, comes from Pakistan and Punjab in addition to the inhouse wrecked law and order situation makes the situation more grave to open borders for trade exchange.
The call to reopen the Attari-Wagah trade route is complex and is coming from both sides of the border. According to recent news reports, Pakistan’s business community has also advocated for the resumption of this historic trade corridor. But the whole debate involves economic potential, security challenges, and political maneuvering. While Harsimrat Kaur Badal’s call highlights a path to potential prosperity, it is imperative to address underlying security concerns to ensure that such a move does not compromise national integrity.
Only through a balanced approach can the benefits of cross-border trade be realised, paving the way for a more prosperous and peaceful Punjab. Historical lessons and current geopolitical realities both emphasise the need for a cautious yet hopeful approach to this complex issue. Therefore, the demand to reopen bilateral trade amidst ongoing situations and growing instability in this part of the sub-continent remains a distant dream, and would only favour Badal’s political relevance in the Punjab state.
Kanwal Singh is a Policy Analyst and Columnist from Jammu and Kashmir. Sagina Walyat is a researcher, analyst, and AsiaGlobal Fellow of The University of Hong Kong.
