Pakistan had suspended trade with India way back in 2019 (following trade tensions triggered by the Pulwama attack) but eased it for some items soon
| Photo Credit:
Ruma Aktar
Decision to suspend all trade with India, including through third countries like Dubai, is set to hurt Pakistan much more as it remains far more dependent on trade with India than the other way around, sources said.
“It will be a challenge for Pakistan to find equally competitive supply chains, especially for items such as pharmaceuticals and organic chemicals. India had the proximity trade advantage, even with shipments having to go via Dubai,” said Ajay Sahai, DG, FIEO.
Pakistan had suspended trade with India way back in 2019 (following trade tensions triggered by the Pulwama attack) but eased it for some items soon, pointed out Nisha Taneja, Professor, ICRIER.
“The pattern we observed then was that within a month of announcing the suspension, Pakistan permitted the import of pharmaceuticals and APIs from India. About a year and a half later, sugar, cotton, and yarn were also added to the list of permissible imports. It would not be surprising if a similar pattern emerges again,” Taneja said.
Minimal Impact
Indian exporters, on the other hand, are unlikely to take a substantial hit as exports to Pakistan is a negligible part of total exports. In April-Jan 2024-25, India’s exports to Pakistan was just $455 million, Sahai pointed out. This was insignificant compared to the country’s overall exports at $358.63 billion in the period. Imports from Pakistan in the first ten months was at just $50 million.
However, informal trade, largely through Dubai, which is much more than formal trade, is expected to swell in the current situation, another source said.
An estimated $10 billion of goods from India reach Pakistan from Dubai every year after being re-labelled as ‘Made in UAE’ products, according to a report by research body GTRI.
Published on April 27, 2025