Moonis Rehman | 05 May, 2025
The recent killing of innocent tourists in Pahalgam, Kashmir, allegedly by Pakistan based militants has taken the Indian Pakistan relations to a new low. The downfall in bilateral trade can be traced back to 2019 when the Pulwama attack happened where Indian soldiers were killed when their convoy was attacked by Pakistan-based militants. After the Pulwama attack, trade worsened between India and Pakistan with India withdrawing the most favored nation (MFN) status from Pakistan and imposing 200% tariffs on imports from Pakistan including fruits, mineral ore, cement etc.
According to data from the Ministry of Commerce, India’s bilateral trade with Pakistan is minuscule, accounting for just 0.06% of the country’s total trade. During April–January 2025, imports from Pakistan stood at $0.42 million, down from $2.86 million in the same period the previous year — a decline of over 85%. Similarly, exports fell by more than 59%, dropping to $447 million from $1,102 million year-on-year.
While the direct trade between the two countries has contracted, It is worth mentioning that indirect trade through third countries like Dubai and Singapore has continued. This Indirect trade continues to affect the MSMEs as they bear the burden of higher logistics costs and longer delivery timelines. Additionally, the exact trade figures are not known due to the indirect trade.
The trade ban will definitely have some impact on MSMEs in both the countries, the impact on India is limited given that our trade with Pakistan accounts for just 0.06% of total trade. On the other hand, Pakistan is likely to bear the brunt of the fallout, as its economy is already reeling from high inflation, currency depreciation, and heavy reliance on IMF loans.
What India used to Import from Pakistan
India primarily imported mineral fuels and oil, edible fruits and nuts, cement, salt, sulphur, raw hides, cotton, and some types of organic chemicals from Pakistan.
What India used to export from Pakistan.
India’s key exports to Pakistan included pharmaceuticals, sugar, cotton, plastics, prepared animal fodder, chemicals, vegetables, and dairy products.
By stopping all trade and other ties with Pakistan India has sent a strong diplomatic and economic message. Cutting off even minimal trade ties adds further strain on Pakistan’s fragile economy while reinforcing India’s stance that acts of terror will not go unanswered — not just militarily or diplomatically, but also economically. Trade, after all, cannot coexist with terrorism.
