India has ratcheted up its offensive against Pakistan by banning with immediate effect all trade with, or through, Pakistan.
The blanket ban, which follows a suspension that was in place after the Pahalgam terror attacks on April 22, was notified last night as a clause inserted into the Foreign Trade Policy. It states that “direct or indirect import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, shall be prohibited with immediate effect, until further orders.”
Another order, issued by the directorate general of shipping, bars Pakistani ships from docking at any Indian port, even while on transit.
Already, both countries have closed their airspace to the other’s respective airlines, a move that would add additional costs running into millions of dollars for India’s airliners like Air India and Indigo.
Government has cited national security and public policy as the reason for the stern trade restriction.
While direct trade between both countries isn’t much anyway since the revoking of the ‘most favoured nation’ status in 2019 after the Pulwama bombing, the fact is that the ban will impact Pakistan at least in one, crucial area – pharmaceuticals. A sizeable chunk of good quality, affordable drugs that Pakistanis use come from India’s pharma sector. Both countries have depended on each other on staples like pulses and sugar as and when there was necessity, caused by drop in domestic production.
But direct trade, as per official figures, is mighty low between India and Pakistan -- India exported (main items include medicines, petrol etc) around $447 million worth of goods to Pakistan the last financial year (till January 2025), while Pakistan’s exports to India were less than a million dollars (copper, glass, fruit and nuts etc).
However, this doesn’t account for the much larger ‘grey zone’ – trade that happens via third party countries. According to the Delhi think-tank GTRI, actual trade between the two rivals could be as big as $10 billion, often routed through third-party trading hubs like Dubai, Singapore and even Colombo in neighbouring Sri Lanka.
It is not clear how India will plug this mode and route, though earlier this week, commerce ministry had taken cognisance of this practice. The latest notification does not speak about this, though the wording, talking about “originating or exporting from’ strikes a blow to one hapless third party – landlocked Afghanistan which has been sending almost all its exports to India through the land route in Pakistan via the Wagah-Attari border.
