Following a recent terror attack in Pahalgam that resulted in the deaths of 26 tourists last month, the Indian government has issued an order, effective immediately, banning the direct or indirect import of all goods from Pakistan. Citing national security and public policy interests, this decision will completely halt all inbound shipments from Pakistan to India.
The Directorate General of Foreign Trade (DGFT), in a notification dated May 2nd, announced the insertion of a provision in the Foreign Trade Policy (FTP) 2023. This new clause, under the heading “Prohibition on Import from Pakistan,” states: “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.” The notification further clarified that any exceptions to this prohibition will require the explicit approval of the Government of India.
During the period of April-January 2024-25, India’s exports to Pakistan amounted to USD 447.65 million, while imports from Pakistan were a meager USD 0.42 million. The primary imports from Pakistan during this period included fruits and nuts (USD 0.08 million), certain oil seeds and medicinal plants (USD 0.26 million), and organic chemicals.
This decision follows a series of actions taken by India after the April 22nd terror attack in Pahalgam. These measures reportedly included the immediate closure of the Attari land-transit post, which was used for the movement of specific goods, the expulsion of Pakistani military attaches, and the suspension of the Indus Water Treaty of 1960. Consequently, trade between the two nations had already effectively ceased.
Bilateral trade between India and Pakistan had already been minimal following steps taken by both sides after the Pulwama terror attack in 2019. In response to India’s latest move, Pakistan has also reportedly announced a suspension of all trade with India, including trade to and from any third country transiting through Pakistan.
Trade figures illustrate the declining economic exchange between the two countries. In 2023-24, India’s exports to Pakistan were USD 1.18 billion, while imports were USD 2.88 million. These figures were USD 627.1 million in exports and USD 20.11 million in imports in 2022-23, and USD 513.82 million in exports and USD 2.54 million in imports in 2021-22.
For the April-January 2024-25 period, organic chemicals and pharmaceutical products constituted approximately 60 percent of India’s total exports to Pakistan, amounting to USD 129.55 million and USD 110.06 million, respectively. Other significant exports included sugar and sugar confectionery (USD 85.16 million), certain vegetables (USD 3.77 million), coffee, tea, and spices (USD 1.66 million), cereals (USD 1.39 million), petroleum products (USD 11.63 million), fertilizer (USD 6 million), plastics (USD 4.16 million), rubber (USD 1.88 million), and auto components (USD 28.57 million).
The deterioration of India-Pakistan trade relations began after the Pulwama terror attack. Following this incident, India raised the import duty to 200 percent on all goods imported from Pakistan, including fresh fruits, cement, petroleum products, and mineral ore. In 2017-18, Pakistan’s exports to India were USD 488.5 million. India also withdrew the Most Favoured Nation (MFN) status granted to Pakistan. At that time, the primary imports from Pakistan were fruits and cement, and the imposition of a 200 percent import duty effectively constituted a ban. India invoked a security exception clause of the World Trade Organization (WTO) to justify the withdrawal of the MFN status. Both India and Pakistan are members of the WTO. India had granted MFN status to Pakistan in 1996, but Pakistan never reciprocated. While Pakistan had committed in 2012 to grant MFN status to India, it later retracted due to domestic opposition and instead considered granting Non-Discriminatory Market Access (NDMA) status, which was also never implemented. Pakistan had already suspended trade ties with India in August 2019 following India’s imposition of heavy import duties.
The long-standing strained relations between the two countries are primarily attributed to the Kashmir issue and cross-border terrorism originating from Pakistan. The total India-Pakistan trade in 2017-18 was USD 2.41 billion, compared to USD 2.27 billion in 2016-17, with India importing goods worth USD 488.5 million and exporting goods worth USD 1.92 billion in 2017-18.
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