India stops formal trade with Pakistan, but demand continues through third countries, increasing costs and complicating supply chains. | Photo credit: Getty images
After the recent terrorist attack in Pahalgam, India has stopped all trade with Pakistan, further increasing tensions between the two countries.
However, according to the Global Commercial Research Initiative (GTRI), this border closure is expected to stop the formal trade alone, not the demand. Pakistan is likely to continue to obtain Indian goods indirectly through third countries, designed at a higher cost.
Gtri mentioned that commercial relations between India and Pakistan have remained tensioned in their pulwama attack in February 2019. At that time, India revoked the most favored nation state of Pakistan (MFN) and a 200 percent tax in 200 percent on the projects. He said: “In summary, border closures stop formal trade, but not demand. Pakistan will continue to obtain Indian goods, only at a higher cost and through third countries.” In response, Pakistan suspended all bilateral trade with India in August 2019. Since then, formal trade has been greatly suspended, with only a few exports of main medications of India, remained for humanitarian reasons.
Despite the official commercial freezing, India exported Goodth $ 447.7 million to Pakistan in the current fiscal year (April 2024 to January 2025), axis for official data. These exports mainly included essential elements such as pharmaceutical products (more than $ 110.1 million), active pharmaceutical ingredients (API) for a value of $ 129.6 million, sugar valued at $ 85.2 Milizers and fertilos $ 12.8 million. On the contrary, imports from Pakistan India were insignificant, ascending to only $ 0.42 million. These imports included niche agricultural articles, such as figs of $ 78,000, and herbs such as Basilio and Rosemary, valued at $ 18,856.
Although formal commercial channels are now completely closed, Pakistan will try to continue imports through informal routes through third countries. GTRI estimates that almost $ 10 billion still takes place in trade through Reexport routes, mainly through the United and Singapore Arab Emirates. According to reports, Pakistan imports several Indian products through these third countries, including pharmaceutical products, chemicals, cotton, tea, coffee, dyes, onions, tomatoes, iron, steel, sugar, salt and auto parts.
On the other hand, India can receive products such as the pink salt of the Himalayas and the dry fruits such as dates, apricot and almonds of Pakistan through similar indirect routes. The current measure is expected to increase the cost of these goods in Pakistan, while complicating supply chains.
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Posted on April 25, 2025
