Trade between India and Pakistan has taken a significant hit after the recent attack in Kashmir, which led to the suspension of diplomatic ties. Bilateral trade, which had already declined sharply since 2018, is now facing further setbacks. In 2024, trade plummeted to just $1.2 billion, down from nearly $3 billion in 2018, according to trade analysts.
Following the killing of 26 people in Kashmir, Pakistan suspended all trade ties with India, including trade through third countries. This includes blocking airspace for Indian airlines and halting the transit of goods. This move is expected to negatively impact sectors like pharmaceuticals in Pakistan, as many essential supplies come from India.
India’s imports through Pakistan to Afghanistan, worth around $640 million annually, will also be affected. The closure of key trade routes, including Attari check post, will disrupt the flow of goods, especially agricultural products. However, India’s exports through sea routes remain unaffected, trade officials noted.
Moreover, trade via third countries like the UAE and Singapore, which had become vital after India revoked Pakistan’s Most Favoured Nation status in 2019, may also see disruptions. This could drive up the prices of essential goods such as medicines, tea, and fertilizer in Pakistan, analysts warned.