Trade in general, and economic projects in particular, can help in attaining peace by facilitating interactions, fostering prosperity and sustainable development.
Attempts to transform India-Pakistan relations are intensely complex endeavours, subject to political, cultural, social, economic and partisan dogmas. Our leaders have tried on several occasions but failed. Perhaps the new democratic leadership in Pakistan may signal a latent opportunity. One could argue that 70 years since the bloody partition is a long enough time to objectively look back to look ahead, to help transform the regressive narrative through positive catalytic projects. One such catalytic project is medical tourism that meets most if not all attributes of what could be transformative for bilateral relations.
A catalytic project is one that can activate a positive social coalition in both countries, release structural drivers and translate discourse into action. The idea is not to realise immediate gains, in fact, quite the opposite. Given the intertwined and volatile history of political and economic relations, a gradual approach is a much preferred option to preclude any economic gains from being nipped in the proverbial political bud. History is replete with instances of economic embargoes being imposed in the aftermath of a political face-off triggered by cross border incidents. Trade is often hostage to political relations with Pakistan and indeed it will continue to be so. If the objective is to reverse the causality i.e. make trade an instrument for peace, it will have to be a slow process, initially building a critical mass of early supporters with the objective of enabling a broader societal alliance over time. Once the broader societal alliance has been created, the project can be scaled up, emerging from under the shadow to the foreground, and embed itself in our collective consciousness. Such a virtuous cycle could take decades to stimulate but it is worth the effort.
It has been a widely held belief that economic interdependence and cooperation motivated by economic diplomacy, including free trade, can be a very effective tool in conflict prevention. The most obvious example of this type is the European Union “peace project”. The relationship between peace and prosperity is theoretically strong and has been empirically validated through several studies. Trade in general, and economic projects in particular, can help in attaining peace by facilitating interactions, fostering prosperity and sustainable development. In other words, economic engagement raises the opportunity cost of conflict. Although trade between India and Pakistan is capricious at best and taboo at worst, there have been several attempts to normalise it. Such efforts are founded on the premise that the two-way trade potential is estimated at $30 billion (at present it is $5 billion). That could make Pakistan amongst India’s top 10 trading partners. The potential is based on lasting liberalisation of the trading regime, including for visas and relaxation of non-tariff barriers amongst others.
The healthcare sector presents a persuasive case to be the vanguard for deeper economic engagement between India and Pakistan. The reason it enthuses confidence is because of several attributes that are intrinsic to the medical services offered. It offers gains all around, carries low political risk, and above all, has the inherent tendency to help build heart-warming narratives both in India and in Pakistan. Already the media of the two countries have reported positively on the limited trade in medical services that exists currently. And if more lives are saved, it will have an impact that is disproportionately bigger than the debit and credit entries in the respective countries’ balance of payments accounts. The reason the intangible impacts will be substantial and perhaps larger than the economic effects is because of the humanitarian aspect. An overwhelming component of trade in medical services involves people-to-people contact with patients travelling across borders for treatment. The bonds of such interactions last for a lifetime and if patient flows reach a critical mass, it holds the potential to snowball into a virtuous cycle.
India’s growing attractiveness as a hub for medical tourism is reflected in the fact that the numbers of medical tourists are rising every year as the rare combination of advanced facilities, skilled doctors, and low cost of treatment becomes recognised, and indeed celebrated, by patients across the world. Domestic and international accreditation has played its part in inspiring confidence among medical tourists in the quality of Indian healthcare. The total number of such visitors in 2017 was 495,056 (provisional) compared to 233,918 in 2015 and 427,014 in 2016 respectively. Bangladesh and Afghanistan dominate the number of medical tourists to India.
The Niti Aayog, India’s official think-tank, has identified medical value travel (MVT) as a major source of foreign exchange earnings. India currently has around 18% of the global medical tourism market. MVT was pegged at $3 billion in 2015 and is estimated to grow at a CAGR of 15%, according to a report by FICCI and IMS Health, a health industry information firm. It has been estimated that by 2020, India’s medical tourism industry could be worth $9 billion, and account for 20% of the global market share. The report pointed out that in curative care, India was the preferred destination for cardiology, orthopaedics, transplants, and ophthalmology. India also enjoys high credibility in wellness, preventive, and alternative medicine.
The opportunity that India-Pakistan healthcare trade offers goes beyond trade itself. As stated above, medical tourism embodies characteristics that can help change the dominant narrative of the past. In the words of Naipaul, a ‘plot is for those who already know the world; a narrative is for those who want to discover it’. People who have known the world of India-Pakistan relations have known it in a restricted way which is often justifiable from their own standpoint. Some have plotted to maintain the status quo. By using the instrument of medical tourism that was unavailable in the past, we can attempt to discover a new narrative, slowly but steadily building a coalition of committed stakeholders willing to give ‘peace a chance’.
The challenges are immense, and this is not the space for those looking for instant results. The existing literature on medical tourism between India and Pakistan lists several impediments, some of which are Pakistan specific. These constraints will need to be addressed along the way, keeping in mind the security threats. That the project is commercially and technically viable is reflected in the existing ventures already in place between the two countries. ICRIER’s research, led by Nisha Taneja, documents such partnerships. Peace Clinic is a collaboration between Apollo Hospitals in India and the Dr Ziauddin Hospital in Karachi. The two medical facilities have jointly set up a combined liver ward for pre- and post-transplant care at Dr Ziauddin Hospital where patients are assessed for their transplant needs and then referred to India for the procedure. Children’s Hospital in Lahore has collaborated with Apollo and Medanta hospitals wherein each year the Children’s Hospital sends equal number of patients to the two hospitals and the entire expenditure is borne by the Pakistan
Medical tourism has the potential to create substantial spillover benefits, or so called positive externalities, because of the compelling humanitarian angle associated with it. Driven by a strong people-to-people connect, the role of healthcare as an entry point for potentially transforming bilateral relations cannot be exaggerated. It is a hard task no doubt, but it would be more difficult if the basic structure were not in place. With the basic structure in place, promoting trade that is procedurally impeded seems an easier task even in the presence of strained and volatile bilateral relations. Let us for a moment examine the counterfactual. Were the procedures smooth but the medical facilities in India primitive, it would have been an even harder task to conceive and promote medical tourism as a catalytic project.
If promoted systematically, medical tourism can provide a virtuous platform for exploring greater economic engagement between the two countries. The humanitarian aspect embodied in healthcare produces helpful political incentives that can shape a good narrative to transform overall bilateral relations permanently and for the better.
The author is Director & chief executive at ICRIER. Views are personal