India’s exports to Pakistan drop sharply; trade suspension to hurt Islamabad more, say experts

New Delhi

India’s exports to Pakistan have fallen by over 56% year-on-year, reaching just $491 million between April 2024 and February 2025, as diplomatic tensions between the two countries intensify. In contrast, imports from Pakistan were negligible, highlighting a sharp imbalance in trade dependency.

Following the recent terror attack in Pahalgam, India has decided to scale down diplomatic ties with Pakistan and suspend the Indus Waters Treaty. In response, Pakistan announced a complete suspension of bilateral trade.

However, experts believe this move will impact Pakistan more severely, especially due to its dependence on Indian pharmaceuticals, bulk drugs, chemicals, sugar, and auto components.

Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), noted that Pakistan’s imports from India make up a minor 0.06% of India’s total foreign trade but are crucial for Pakistan’s healthcare and manufacturing sectors. India’s exports to Pakistan had previously peaked at $2.06 billion in FY19. While direct trade has declined significantly, indirect trade routed through countries like the UAE, Singapore, and Sri Lanka is estimated at over $10 billion annually, according to the Global Trade Research Initiative.

This is not the first time trade has been disrupted between the neighbors. In 2019, after the Pulwama attack, India revoked Pakistan’s Most Favoured Nation (MFN) status. As political relations continue to sour, the future of both direct and indirect trade between the nations remains uncertain.