The state of emergency declared by President Pervez Musharraf in Pakistan has substantially reduced the amount of import letters of credit (L/Cs) opened in the country.

Indian exports have been hit particularly hard, with, Indian exports to Pakistan down by about 25 per cent since the state of emergency was proclaimed according to a senior industry executive

Difficult trades

Indian Spice and Food Stock Export Association chairman Bhaskar Shah told local media that exporters are wary of doing business with Pakistan.

"Pakistani banks have stopped giving L/Cs to importers due to the emergency, so trade has become more difficult," he said.

Problem payers

The current situation has increased concerns amongst Indian exporters who, according to Shah, already see their neighbours in Pakistan as slow payers.

According to Mumbai Kirana Merchant Association Committee member Kanu Mehta, until the Pakistan banks start issuing L/Cs, the situation will not improve.

President Musharraf has promised to lift the state of emergency on 16 December.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.