New Delhi [India]: In the wake of the April 22 terror attack in Pahalgam, Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), has stated that Pakistan is likely to face significant economic challenges due to the resulting disruption in bilateral trade.
Highlighting the already strained commercial ties, Sahai explained that Pakistan had never granted India Most Favoured Nation (MFN) status, while India had imposed a 200 per cent tariff on Pakistani imports after the 2019 Pulwama attack.
“India did not have good trade relations with Pakistan in any case. Pakistan denied India MFN status, and we imposed a 200 per cent tariff… So it’s not great looking into the numbers in comparison to India’s overall export of USD 800 billion,” Sahai remarked.
Minimal Impact on India, Major Setback for Pakistan:
According to Sahai, India is unlikely to feel any significant economic impact, but the same cannot be said for Pakistan. The disruption may force Pakistan to restructure its import strategies, especially for key goods like pharmaceuticals and organic chemicals, which were previously sourced from India due to regional proximity.
“Disruption in trade is not going to have any impact on India… On the contrary, Pakistan may have to look into where they import pharma and organic chemicals… That advantage of proximity will no longer be with Pakistan,” he added.
Historical Context and Current Trade Stats:
Trade between the two countries had been in a frozen state since the 2019 Pulwama attack, when India revoked Pakistan’s MFN status and imposed steep duties. Despite that, India exported goods worth USD 447.7 million to Pakistan in the current fiscal year (April 2024–January 2025), while imports from Pakistan remained negligible at just USD 0.42 million, according to official data.
Informal Trade Channels Still Active:
A Global Trade Research Initiative (GTRI) report suggests that around USD 10 billion worth of trade continues via re-export routes through countries like the UAE and Singapore. These indirect channels are expected to become more important as formal trade shuts down.
Products exported from India to Pakistan through third countries include:
- Pharmaceuticals
- Chemicals
- Tea & Coffee
- Cotton
- Fruits & Vegetables
- Iron, Steel, Auto Parts
Meanwhile, India imports:
- Himalayan pink salt
- Dried fruits like apricots, almonds, and dates
Conclusion:
India’s recent decision to halt trade is expected to raise the cost of essential goods in Pakistan and disrupt existing supply chains, adding further pressure to an already struggling Pakistani economy.