Tensions have increased between india and pakistan after terrorists shot dead 26 people in Kashmir's pahalgam area last week. While both countries have kept their armed forces on alert, pakistan has been violating the ceasefire for the 8th consecutive day. The indian government imposed several restrictions and bans following the attack by Pakistani terrorists. Following this, both countries took several drastic measures such as canceling visas and closing the Wagah-Attari border. Although there was talk that this would affect trade between the two countries, the situation on the ground is actually upside down. Although according to official statistics, trade between the two countries is very low, experts say that goods worth billions of dollars are continuously exported and imported through indirect trade. How does indirect trade happen from india to pakistan and from pakistan to India..?

India-Pakistan Trade:

After the british government separated from india in 1947 and india and pakistan were formed, trade between the two countries started. However, due to the continuous tension between the two countries, trade did not fully develop. However, after many restrictions, many regulations, and many agreements, trade between the two countries continued with great restrictions.
In the 2017-18 financial year, the total trade between the two countries was $2.41 billion, of which India's exports were $1.92 billion and imports were $488.5 million. However, following the 2019 suicide bombing in Pulwama, Kashmir, which killed 40 indian paramilitary personnel, india revoked Pakistan's Most Favoured Nation (MFN) status. As a result, trade between the two countries declined from $2.41 billion to $1.2 billion between 2018 and 2024. Pakistan's exports to india were $547.5 million in 2019, falling to just $480,000 in 2024.
According to data from the indian Ministry of Commerce, India's exports to pakistan from april 2024 to january 2025 stood at $447.7 million. This includes pharmaceuticals, petroleum, plastics, rubber, chemicals, dyes, vegetables, spices, coffee, tea, dairy products and grains. During the same period, Pakistan's exports to india were only $420,000. Of these, copper, glassware, organic chemicals, sulfur, fruits, nuts, and some oilseeds are important. This is all direct trade between the two countries, but it is said that billions of dollars worth of goods are exchanged between the two countries in indirect trade.

Indirect trade:

Although India's official exports to pakistan are $447.7 million, experts believe that the amount of indirect trade is much higher. According to data released by the Global Trade Research Initiative (GTRI), India’s exports to pakistan are actually estimated at $10 billion per year. This indirect trade takes place through third countries, and under this trading system, GTRI has said that it is possible to avoid restrictions, bypass inspections, and re-brand goods and sell them at higher prices between india and Pakistan.

GTRI founder ajay Srivastava explained the indirect trade system in a post on LinkedIn. "Indian goods are shipped through Dubai, singapore, and Colombo ports. These goods are stored in warehouses there. While in storage, duty is not paid, the origin of the goods is changed in documents and labels. Then, these goods are re-exported to pakistan under the name of a new country, for example, the United Arab Emirates instead of india, he said. While this trade is not illegal, "this strategic trade has the potential to undermine the strength of the policies," Srivastava said.
Experts believe that this trade, which is carried out through hubs like singapore and Colombo, will not be significantly affected by the border closure. However, the cost of this indirect trade may increase, which is likely to lead to higher prices of goods.
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Sowmiya Sriram

02/05/2025 03:17 PM