Traders from Pakistan’s northern Gilgit-Baltistan region showcased regional economic potential at the 16th Xinjiang Kashi – Central and South Asia Commodity Fair in China, just as local merchants ended a two-month border sit-in following a tax exemption agreement brokered by Islamabad.
The Road from Sost Dry Port to the Kashi Expo
For two months, the trade artery connecting northern Pakistan to China via the Khunjerab Pass remained virtually frozen. Importers, exporters, and customs clearing agents launched a sit-in protest at the Sost dry port in late July, demanding relief from sales and income taxes. Because Gilgit-Baltistan operates as a semi-autonomous, non-tariff territory, local merchants argued that the imposition of standard federal consumption taxes threatened their livelihood.
The blockade brought cross-border movement and trade to a halt, worrying officials in both Islamabad and Beijing. According to Senator Saleem Mandviwalla, the prolonged standoff created anxiety given the volume of bilateral exchange. Pakistan’s trade imbalance with China remains tilted toward Beijing, creating a domestic need to bolster northern export capabilities.
Ministry of Commerce officials speaking before a National Assembly Standing Committee on Commerce revealed fiscal realities for the 2024–25 fiscal year. Pakistan’s imports from China stood at $17 billion, while exports to Beijing were recorded at $2.7 billion. Against this trade deficit, showcasing northern goods at the Kashi Expo offered a platform to highlight value-addition and drive regional market integration.
Inside the Islamabad Tax Relief Deal
The deadlock was addressed on August 17, when Prime Minister Shehbaz Sharif established a committee headed by Energy Minister Sardar Awais Leghari. Federal Bureau of Revenue (FBR) Chairman Rashid Mahmood Langrial explained the administrative hurdle during a joint news conference alongside Leghari, GB Chief Minister Hajji Gulbar Khan, and Senator Mandviwalla.
“While there is no consumption tax for GB, we did not have a mechanism to ensure that the exemption is offered only to the local population,” Langrial told reporters, outlining why duties had previously sparked friction at the Sost border.
Under the agreement, the state has overhauled collection protocols at the border checkpoint. Sales tax, income tax, and federal excise duty will no longer be collected at the border. However, customs duties and regulatory duties remain in place.
| Metric / Provision | Detail |
|---|---|
| Protest Duration | Late July to August (Approximately 2 months) |
| Government Committee Head | Energy Minister Sardar Awais Leghari |
| Annual Tax Exemption Cap | Up to Rs4 billion ($14.34 million) per annum |
| Estimated Bilateral Trade Impact | Over Rs100 billion ($358.42 million) |
| Previous Fiscal Tax Collection | Approx. Rs16 billion ($57.35 million) at Sost border |
As per the accord, these fiscal exemptions apply exclusively to local firms registered with the Gilgit-Baltistan government. Furthermore, the total annual value of these tax exemptions is capped at Rs4 billion, equivalent to roughly $14.34 million. Faizullah Faraq, spokesperson for the GB chief minister, noted that the reopening would impact trade worth more than Rs100 billion between Pakistan and China, following a border that collected around Rs16 billion in taxes last year.
Resuming Trade Ties at Khunjerab Pass
Ashafaq Ahmad, chairman of the GB Chamber of Commerce and Industry and a leader of the region’s traders, welcomed the written agreement. “We are thankful to the government for granting us tax exemptions and hope the written agreement will be implemented,” Ahmad stated.
Ahmad called on traders to resume cross-border activities starting Thursday. This revival of movement through the Khunjerab Pass allows delegations to pivot toward international exhibitions like the Kashi Commodity Fair, where Central and South Asian vendors display regional goods and consumer technologies.
By shifting focus from border blockades to international trade showcases, Gilgit-Baltistan’s business community aims to reassert its role in Eurasian commerce.
The Broader Geopolitical Horizon
The resolution of the Sost protest underscores the balancing act defining trade corridors. The China-Pakistan Economic Corridor relies on logistics through northern passes. Friction in regions like Gilgit-Baltistan reverberates across supply chains linking western China to ports.
As merchants unpack their wares in Kashi alongside global buyers exploring AI-driven hardware and automated devices, stability at the border remains a prerequisite for economic integration. With the sit-in concluded and the tax concession in place, northern traders are betting that international exposure will outweigh local administrative battles.
