Real economic shock for Pakistan! India entered $ 500 million Pakistani goods through third countries
India’s import ban on Pakistan: In a major economic vengeance after the Pahalgam attack, the Narendra Modi government has implemented comprehensive sanctions, which restricts all imports from Pakistan, whether they are with postal services and parcel delivery from countries of intermediaries as well as intermediary countries.
The administration also banned Pakistan-regulated ships from entering Indian ports and prohibited Indian ships from reaching the Pakistani port, indicating a difficult situation amidst deteriorating diplomatic relations.
“This comprehensive restriction, including indirect imports, will enable custom authorities to prevent custom officials from entering India,” an official told TOI. This action represents the second adequate non-synake measure after the first implementation of visa boundaries.
What has changed?
The Directorate General of Foreign Trade (DGFT) has issued a notification on 2 May, announcing a new provision in the Foreign Trade Policy (FTP) 2023 which prevents the import of fully from Pakistan. The provision states that “to restrict the direct or indirect imports or transit of all the goods arising out of Pakistan with immediate effect until further orders”.
Notification emphasizes that this ban has been implemented due to concerns about “national security and public policy”. For this prohibition, clear approval of the Government of India will be required for any exemption.
The provision of “prohibition on imports from Pakistan” in FTP clearly stated: “Direct or indirect imports or transit of all the items arising or exported from Pakistan, whether they are independently or otherwise allowed, will be restricted with immediate effects, until further orders”.
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Decline trade
- During April 2024-January 2025, India’s imports from Pakistan were only $ 0.42 million, mainly included plants, seeds, date, figs and map extracts. This is a significant drawback in FY23 from $ 20.21 million.
- After the Pulwama terrorist incident, the trade relations between the two countries deteriorated after implementing 200% duty on Pakistani products in 2019.
- Subsequently, the then Imran Khan administration in Islamabad stopped trade relations after ending the special status of Jammu and Kashmir in August that year.
- The volume of bilateral trade declined from $ 2.5 billion in FY 2019 to about $ 1.2 billion in FY 2014.
- The adequate tariff hike and the MFN status withdrawal post-Palvama incident has led to a dramatic decline in direct imports from Pakistan, which fell from about $ 500 million in 2018-19 to $ 480,000 in 2023-24.
- Sources informed TOI that the most affected products included horticulture goods, cement, salt and cotton yarn, now routing through other countries with trade.
What will be the direct effect now?
According to Think Tank GTRI, India’s economy is largely unaffected by low -Pakistani imports.
“However, Pakistan still needs Indian products and can continue to reach through third countries through recorded and unattainable routes. India’s already small imports from Pakistan will now be zero. Nobody will miss anything in India, except the Himalayas, pink salt (Seda salt), Pakistan’s salt was extracted from the salt deposits.
Indian exports to Pakistan, though historically sufficient, have recently shown a decreasing trend.
“The current status of formal trade between India and Pakistan reduces the impact of the current trade restriction, the main impact will be on the economy,” told TOI, leader of EY India’s trade policy, Agneshwar Sen told TOI.
Real blow for Pakistan: Rerouting Chked
The real economic shock for Pakistan may come as ‘indirect’ imports
, While the amount of trade between India and Pakistan is modest in direct exchange, indirect commerce through mediated countries is quite high!
Products, including dried fruits and chemicals worth $ 500 million, are allegedly being entered into India through mediated countries. According to an official, a large part of the $ 500 million exports sent directly from Pakistan to India is now being diverted through alternative countries.
Even before 2019, the important amount of goods entered India through the third nation. Subsequently, these movements accelerated, especially through UAE and Sri Lanka, potentially exploiting trade agreements, while Indian authorities demonstrated inadequate inspection.
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Pakistani objects, including fruits, dry dates, leather and textiles, passing through repaiking in the UAE, while chemicals and special items transit through Singapore. Indonesian routes provide the movement of cement, soda ash and textile raw materials.
Additionally, dried fruits, salt and leather products are processed and distributed through Sri Lanka, safta benefits are used.
The government’s strategy is uncertain as long as the strict enforcement of restrictions can reduce these channels.
Given the possibility that some $ 500 million exports are now reaching India through alternative routes, a government official has emphasized the need to implement a comprehensive prohibition on Pakistani exports, whether it is direct or indirect.
Additionally, there is a need to monitor and identify the objects that can enter through the misconception of the country.
“This comprehensive ban, including India’s ban on indirect exports by India, would enable customs authorities to prevent Pakistan’s exports from entering India,” the official said.
