South Asia Investor Review

Pakistan has recently launched 5G wireless service in multiple cities and closed financing on the 306 kilometer 6-lane Sukkur-Hyderabad M6 motorway. In addition, Pakistan is seeing significant increase in the utilization of its Gwadar and Karachi ports after the closure of the Strait of Hormuz due to the US-Iran war. This will help open the trade routes from Pakistan to Central Asia via Iran, bypassing unstable Afghanistan. It has the potential to eventually make Pakistan a major transshipment hub for the region extending to the land-locked Central Asian Republics. Another major news is the Asian Development Bank financing of cross-border connectivity of the power grid and digital networks. These developments are expected to substantially enhance economic activity in the country, in spite of the short-term negative impact of the energy crisis, particularly in oil and gas imports.  5G Launch: Wireless carriers Jazz and Zong have launched 5G services across Pakistan in March 2026. ...

The European Union (EU) and India have recently agreed to a trade deal which includes an MOU to allow “an uncapped mobility for Indian students”, according to officials, allowing Indians greater ease to travel, study and work across EU states. India's largest and most valuable export to the world is its people who last year sent $135 billion in remittances to their home country. Going by the numbers, the Indian economy is a tiny fraction of the European Union economy. Indians make up 17.8% of the world population but contribute only 3.3% of the global  GDP . The European Union, on the other hand, has just 5.6% of the global population and produces 17.8% of the world's economic output.  Indian Economy Dwarfed by EU. Source: DW If finally signed and implemented, this "uncapped mobility" for Indians will probably become the most significant part of the deal.  “More than 800,000 Indians are living and actively contributing to the countries of the European Union", acc...

The United States is the biggest export market for India. Among its top 5 trading partners, the US is also the only country with which India runs a trade surplus. This surplus is now at risk with the 50% tariff recently imposed by President Donald Trump on imports from India. Can Prime Minister Narendra make up for it by cozying up to China and Russia ? Recent trade data shows he can't.  While India has enjoyed a significant surplus in trade with the US,  the South Asian nation has been running large trade deficits with China and Russia. Last year, for example, India had a $100 billion trade deficit with China and a $62 billion deficit with Russia. On the other hand, India ran over a $40 billion trade surplus with the US. Given these figures, it's hard to understand what India hopes to achieve by getting closer to Beijing and Moscow. The fact is that the US is the world's biggest economy that offers the largest and most profitable export market for most countries. Loss of t...

President Donald Trump has imposed 50% tariffs on India's exports to the United States. This is far higher than most countries facing US tariffs. Explaining the punitive India tariffs, US Treasury Secretary Scott Bessent said: "India came to the table early. They’ve been slow rolling things. So I think that the president, the whole trade team has been frustrated with them. And also, you know, India, India has been a large buyer of sanctioned Russian oil that they then resell as refined products. So, you know, they have not been a great global actor".  Indian Cartoonist Satish Acharya on Trump-Modi Dialog. Source: Satish Acharya Since taking office in January 2025, President Trump has been signaling his intent to apply  tariffs  on India's exports repeatedly. Trump has been singling out India as a country with the highest tariffs it applies on exports from the US.  Indian cartoonist Satish Acharya published a caricature of Modi-Trump conversation portraying Modi's ...

President Donald Trump's announcement of "reciprocal tariffs" has shocked the world. Nations and corporations were all expecting the US to increase tariffs but the scope and scale have caused severe tremors in the global economy.  There's a base level of 10% tariffs on all trading partners. Imports from China (54%), Vietnam (46%), Bangladesh (37%), Pakistan (29%), India (26%), Japan (24%) and the European Union (20%) are all subject to higher tariffs. Even the poor African nation of Lesotho (GDP: $2.5 billion) has not been spared. It is now subject to a 50% tariff on the jeans it exports to the United States.  Trump's Reciprocal Tariffs. Source: CNBC The charts showing President Trump's claimed tariffs on US imports by other countries have no resemblance to reality. For example, the US Commerce Department claims Pakistan imposes a 58% tariff on imports from the US. Pakistan's trade weighted average tariffs on the US goods were  7.3%  compared to 9.9% that ...

During the last Trump Administration in 2019, India's friends in Washington argued for a US policy of " strategic altruism " with India. The new Trump administration seems to be rejecting such talk. Prior to his recent meeting with Prime Minister Narendra Modi at the White House, President Donald Trump described India as the "worst abuser of tariffs" and announced "reciprocal tariffs" on Indian imports to the United States.  At the same time, Mr. Trump cracked down on both legal and illegal immigration from India. His administration is deporting thousands of illegal Indian immigrants in  handcuffs and shackles  on US military aircraft. Meanwhile,  stringent new regulations  on temporary work visas could significantly delay visa processing times and reduce the number of Indian workers employed in the United States on H1B visas.  Tariffs Comparison. Source: BBC In a 2019 piece titled "The India Dividend: New Delhi Remains Washington’s Best Hope in A...

What good is a currency in global trade if it can not be used to buy products and services from other nations that a country needs?  The answer to this question came when Russia said it has accumulated billions of rupees in Indian banks which it can not use. “This is a problem”,  Russian Foreign Minister Sergei Lavrov told reporters in India’s Western state of Goa on the sidelines of the Shanghai Cooperation Organization meeting.  “We need to use this money. But for this, these rupees must be transferred in another currency, and this is being discussed now”.  Russia has decided it won't take any more Indian rupees. Moscow has rejected New Delhi's proposal for the Kremlin to invest rupees from oil and military equipment payments back into Indian capital markets so the currency doesn't pile up. Global Export Map 2023. Source: World Population Review Only the currencies issued by the governments of the world's largest exporters are useful for buying products and service...

"It may be dangerous to be America's enemy, but to be America's friend is fatal" Henry Kissinger India is emerging as the biggest beneficiary of the Ukraine War and the US efforts to check China's rise. Indian businesses are busting US sanctions to take advantage of the vacuum left in Russia by the exit of western businesses since the start of the Ukraine War.  At the same time, the US is rewarding India by promoting it as an alternative to China in the global supply chain.  Meanwhile, Beijing is warning New Delhi that India "will be the biggest victim" of America's "proxy war" against China.  L to R: Modi, Putin, Xi and Biden Soaring Russia-India Trade:  Since the start of Russia's invasion of  Ukraine , India has ramped up its imports of  Russian oil  by a whopping 33 times, according to the  Christian Science Monitor .  Dr. Nivedita Kapoor, an Indian expert at the Higher School of Economics in Moscow, told the Monitor: “Right now the...

Pakistan does not produce tea but it is the most popular beverage among Pakistanis.  The country is ranked as its largest importer in the world.  In 2020, Pakistan imported $646 million (9% of global tea imports) worth of tea and exported $15.2 million in branded blends of tea such as Tapal Tea. Pakistan tea imports grew 19.8% from 2019 to 2020.  Pakistan Tea Trade. Source: The Observatory of Economic Complexity Other major tea importers in 2020 were as follows: United States: $473.8 million (7.1%) Russia: $412.2 million (6.2%) United Kingdom: $348.7 million (5.2%) Saudi Arabia: $243.6 million (3.7%) Iran: $236.3 million (3.5%) Hong Kong: $221.8 million (3.3%) Morocco: $202.3 million (3%) Egypt: $197.2 million (3%) Germany: $195 million (2.9%) China: $180 million (2.7%) France: $168.1 million (2.5%) United Arab Emirates: $164.9 million (2.5%) Japan: $156.6 million (2.4%) Iraq: $134.7 million (2%).  Global purchases of imported tea totaled US$6.7 billion in 2020. Of ...

China's central bank is testing its digital currency in several major Chinese cities. The chairman of US Federal Reserve has recently confirmed that the US Central Bank is working on digital dollar. The State Bank of Pakistan announced in 2019 that it was developing a digital currency. It seems that the popularity of Bitcoin has triggered serious worries of loss of control of the official financial systems among the central bankers around the world. China's substantial lead in digital currency could put it far ahead of the US in the future of global payments and financial settlement. It could eventually displace the US dollar and provide China with the immense global financial power that the US currently enjoys.  Digital Yuan Central Bank Digital Currency (CBDC): What Is a Central Bank Digital Currency (CBDC)?   Investopedia  defines it as a digital currency that "uses a blockchain-based token to represent the digital form of a fiat currency of a particular nation (o...

Imran Khan's government has completed about half of its 5-year term it won in 2018. What are its accomplishments? Where has it failed in terms of economy and foreign policy.  Economy: Imran Khan inherited a serious  balance of payments  crisis cased by flat exports and record high imports in 2013-2018 period under Pakistan Muslim League (Nawaz) government. while the PTI government was still dealing with it, the country and the world were hit by  COVID19 pandemic  that devastated the global economy.  Pakistan's Trade July2020-Jan2021. Source: Arif Habib The 2019 International Monetary Fund's bailout required the PTI government to significantly devalue the Pakistani rupee to make exports competitive, and to raise interest rates to slow down imports. These actions triggered inflation, particularly  food inflation , as energy and fertilizer prices rose.  Export Growth in South Asia. Source: Wall Street Journal The global COVID19 pandemic hit Pakistan ...

Pakistani diaspora sent home $14.2 billion in remittances in July-December 2020 , up 25% from the same period in 2019. Pakistanis settled in the United Kingdom and the United States increased their remittances by 52% and 47% respectively in this period, helping Pakistan achieve a record $1.8 billion current account surplus in the first 6 months of the ongoing fiscal year 2020-21.  Remittances From Pakistani Diaspora. Source: Arif Habib While Pakistan's exports increased a modest 5.1%, the remittances from overseas Pakistanis jumped a hefty 25% in response to an appeal by Prime Minister Imran Khan who remains very popular among them. He drew nearly 30,000 Pakistani-Americans to a rally during his Washington D.C. visit in 2019.  Pakistan Trade 1H of FY 2020-21. Source: Arif Habib Pakistan's imports increased 5.5%, more than the 5.1% increase in exports, during the first half of the current fiscal year 2020-21. This resulted in $12.4 billion trade deficit, a 5.9% increase. Witho...