In a detailed and bold study 'Devising an Indian Policy on sanctions for Pakistan' made available to ET, Gateway House suggests India need to adopt a comprehensive regulatory framework on sanctions to sanction Pakistan which has been facing heat from G20 and FATF over last few years

NEW DELHI: Delhi could initiate a policy to impose sanctions on Pakistan with Islamabad continuing to pose a threat to India’s national security, foreign policy and economy and as part of the policy warn Chinese companies that has presence in both countries of adverse consequences suggests leading Indian think tank Gateway House (Mumbai-based).

In a detailed and bold study 'Devising an Indian Policy on sanctions for Pakistan' made available to ET, Gateway House suggests India need to adopt a comprehensive regulatory framework on sanctions to sanction Pakistan which has been facing heat from G20 and FATF over last few years.

The suggestions by the think-tank include “threat of sanctions” to foreign firms which are active both in India and Pakistan including Oppo, Morris Garages and Haier from China. Oppo has a significant market share in India and MG’s presence has increased within months of its launch. MG is planning to open a plant in Pakistan.

Among its other suggestions the study has recommended imposing blanket bans on FDI and Overseas Direct Investment (ODI) to Pakistan under the Foreign Exchange Management Act (FEMA) and related regulations and make it mandatory for Indian companies to make a prior disclosure under the Companies Act, 2013 when an investment is proposed to be made in or with a Pakistan entity.

With its focus on Neighbourhood First, Act East, multipolarity and regionalism, India is nurturing its friendships and can leverage this to create a network of influence that will support the implementation of an Indian sanctions regime against Pakistan, according to the study. “It is important to ensure that sanctions imposed, multilaterally or unilaterally, are in line with international humanitarian law. In the UN charter, Article 55(c) read with Article 56 clearly states the importance of following human-rights law. It is important to protect the economic, social and cultural rights of the affected sanctioned population. For this purpose, a monitoring and an evaluation process must be developed,” the Gateway House recommended.

The study further calls for amending export laws to control re-export. “For example, when Sri Lanka imports electronic chips from India, it should not be allowed to re-export them to Pakistan. The U.S. has successfully enforced similar control on re-export of certain commodities under the Export Control Act.”

If India decides to impose sanctions on Pakistan, it is important that it adopt a whole-of-government approach so that all government departments – including the National Security Council, Ministry of Home Affairs, Ministry of Defence, Ministry of External Affairs, Ministry of Commerce, Ministry of Textiles, and Ministry of Electronics and Information Technology – come together to ensure that the measures are well-phased and targeted, the study felt.

India’s formal exports to Pakistan include textiles and chemicals. Trade between the two countries has been at a standstill since 9 August 2019, after India abrogated the special status granted to Jammu and Kashmir. Given the low volume of trade, India’s role in Pakistan’s economy is minimal and vice-versa. However, informal trade between India and Pakistan continues to thrive, with exports from India valued at over $4 billion. The main goods involved in the informal trade are jewellery, textiles, and electronics and the trade is routed through countries such as Dubai.