NEW DELHI: Pakistan’s decision to stop all trade with India including those passing through its territory from third countries would bring the already minuscule direct trade between the two countries to a complete halt. The impact of Thursday’s announcements would also be felt on Afghanistan’s exports to India.
“The trade will now come to complete stand still affecting supply of some key products to Pakistan, hitting their economy further,” president of Federation of Indian Export Organisations (FIEO) S C Ralhan said.
“We have minuscule trade with Pakistan , which is constantly declining. During April-Jan 25, the same was not even $ 500 million as again overall trade of over $ 800 Bn in the same period, which makes it 0.06% of India’s international trade,” he added.
Pakistan’s decision to suspend all trade with India came a day after New Delhi announced the scaling down of diplomatic relations with Islamabad and suspension of the Indus Water Treaty. Pakistan has also announced that it will not allow flights by Indian aviation companies to use its airspace.
This is the second shock to trade between the two countries and will bring down to zero whatever remains of it since 2019. Direct trade between the two countries came down sharply after India withdrew Most Favoured Nation (MFN) status from Pakistan and imposed 200% duties on imports after the Pulwama attack of February 2019. In August 2019 India scrapped Article 370 that was applicable to Jammu and Kashmir after which Pakistan announced suspension of all trade with India.
Now limited exports, primarily in pharma and chemicals, go from India to Pakistan. India’s imports from Pakistan were fruits and nuts, leather, textiles and some surgical goods in the past years. The products remain the same but now volumes have gone down sharply.
Prior to Pulwama and scrapping of Article 370 India’s exports to Pakistan in 2018-19 stood at $ 2.06 billion and in 2019-20 it fell to $ 816 million. Imports from Pakistan fell from $ 494.8 million in 2018-19 to $ 13.97 million. In 2024-25 India’s exports to Pakistan stood at $ 447.6 million down from $ 1.1 billion in 2023-24, In FY 24 Pakistan also bought petroleum products from India. Imports from Pakistan in 2024-25 stood at $ 0.42 million.
After the spat of 2019 most of India-Pakistan trade started happening through Dubai. Indian consumer goods and even vegetables like onions went to Pakistan through Dubai. There are no official estimates of India-Pakistan trade through Dubai.
Pakistan allows Afghanistan to export to India using its land route. Indian exports have to take alternate routes including sea and land route using Iranian seaport of Chabahar. Afghanistan’s exports to India were $ 591 million in the last financial year while imports $ 264 million.
Source: The Financial Express
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