In a sharp escalation of punitive measures following the April 22 Pahalgam terror attack, India has imposed a sweeping ban on the direct and indirect import or transit of all goods originating in or exported from Pakistan, marking a complete shutdown of commercial engagement. This includes barring access to Indian ports for Pakistani-flagged ships, deepening the diplomatic and economic freeze between the two nations.
According to a notification issued by the Commerce Ministry, a new clause in the Foreign Trade Policy (FTP) now explicitly prohibits such trade on grounds of national security and public policy. The order comes into force with immediate effect and will remain in place "until further orders." The Directorate General of Shipping separately issued an order stating that no vessel flying the Pakistani flag will be allowed to dock at any Indian port, citing protection of Indian assets and infrastructure as the rationale.
The already fraught bilateral trade relationship—crippled since India revoked Pakistan's Most Favoured Nation (MFN) status in 2019 after the Pulwama attack—has now ground to a complete halt. The closure of the Attari-Wagah border, the only functional land trade route between the two countries, has formally cut off over ₹3,800 crore worth of trade seen in FY 2023-24. In retaliation, Pakistan has also suspended all trade with India, turning what was once a low-level economic exchange into a zero-sum deadlock.
Though direct trade volumes between India and Pakistan have been minimal in recent years, many Pakistani goods—particularly textiles, dry fruits, spices, and some industrial components—were entering India via third countries like the UAE (Dubai), Singapore, and Sri Lanka (Colombo), bypassing bilateral restrictions. India’s new policy specifically blocks these indirect trade channels, closing a loophole used to sustain minimal commercial flow.
In 2023-24, India’s direct imports from Pakistan stood at just USD 3 million, mostly consisting of agricultural items. Yet the broader impact of India’s decision will likely be felt more acutely in Pakistan’s small trader and manufacturer ecosystem, particularly in sectors that relied on access to the Indian market for scale and margins.
A major point of concern for Pakistan is the pharmaceutical sector, which has long depended on Indian suppliers for essential drugs and raw materials. With India cutting off even indirect trade, Pakistani health officials are reportedly scrambling to source alternatives from China, Turkey, and Iran to prevent medicine shortages.
India’s trade and maritime bans are part of a broader and intensifying diplomatic offensive following the Pahalgam attack, in which 26 civilians, mostly tourists, were killed by Pakistan-based terrorists. Alongside trade restrictions, India has:
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Closed its airspace to Pakistani carriers
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Revoked visas issued to Pakistani nationals
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Frozen diplomatic engagements and downsized missions
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Announced a review of the Indus Waters Treaty
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Suspended cross-border bus and rail services
These coordinated actions signal a hardening of India’s stance on cross-border terrorism and a willingness to use economic levers more aggressively in the geopolitical domain.
