India examines indirect exports to Pak amid rising tensions

New Delhi

The Indian government is gathering data to assess the scale of indirect exports to Pakistan via third countries, as part of efforts to curb the rerouting of shipments. Industry sources have revealed that this initiative also explores alternative air routes for goods, following Pakistan's closure of its airspace to Indian carriers.

Items like flowers, fruits, and vegetables are typically exported via air to regions such as the Middle East. These measures come in response to the terrorist attack in Pahalgam last week, which claimed 26 lives, prompting a stern government reaction.

India is collecting export data from customs, export promotion councils, and other departments to monitor the situation. According to the Global Trade Research Initiative (GTRI), over USD 10 billion worth of Indian goods reach Pakistan annually through third-party ports like Dubai, Singapore, and Colombo, bypassing trade restrictions.

GTRI explains that goods are offloaded in bonded warehouses at these ports, where the products are re-labeled with new countries of origin before being shipped to Pakistan. This tactic allows companies to circumvent direct trade bans, avoiding scrutiny and often selling at higher prices.

In light of the escalating tensions following the Pahalgam attack, India and Pakistan have halted land-based trade, with both countries suspending trade, including through third-party routes. India's exports to Pakistan have significantly reduced, with total outbound shipments for April-January 2024-25 at just USD 447.65 million, a sharp decline from previous years.