In charts: Is Indo-Pak trade too little to matter?
Summary
The suspension of trade between India and Pakistan following the terror attack in Kashmir will bring to a complete halt an already minuscule trade between the two nations. Mint explores the dynamics of India-Pakistan trade ties.Tensions between India and Pakistan surged following last week’s terrorist attack on Indian tourists in Pahalgam, Kashmir, prompting a suspension of trade relations between the two countries. A Mint analysis of trade data shows that India remains less dependent on Pakistan, with exports far exceeding imports.
The latest suspension comes against the backdrop of already weakened trade ties. Relations had suffered a major blow after the 2019 Pulwama attack, when India revoked Pakistan’s most-favoured-nation status. As a result, India’s exports to Pakistan collapsed from $2.1 billion in 2018-19 to just $0.8 billion in 2019-20. While exports partially recovered over the following years—reaching a five-year high of $1.2 billion in FY24—driven largely by petroleum and crude products, they have yet to return to pre-2019 levels.
Imports, meanwhile, have fallen even more sharply, with India now importing almost nothing from its neighbour.
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A closer look at the trade composition reveals that manufactured goods dominate India’s exports to Pakistan, accounting for nearly 70% of the total. This includes pharmaceutical supplies, engineering goods, and transport equipment. Agricultural products, led by sugar, processed fruits, and rubber, form the second-largest category, contributing 26.8% of the exports.
The early 2000s marked the high point of India-Pakistan trade, with bilateral commerce growing at a compound annual growth rate of 39% between FY04 and FY09—a period marked by relative political stability. Trade continued to expand until FY14, before declining sharply in the years that followed.
Today, trade volumes are too small to significantly impact either economy. The decision to shut down the Attari border is likely to affect passenger movement more than cargo flows.
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Data from the Land Ports Authority of India show that cargo movement through Attari plunged after 2018-19 and has remained low, while passenger traffic—aside from the two pandemic-affected years—has held relatively steady.
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While India-Pakistan trade is likely to come to a complete halt, exports and imports through third countries cannot be ruled out. According to estimates by the Global Trade Research Initiative (GTRI), Indian goods worth over $10 billion reach Pakistan each year indirectly through ports such as Dubai, Singapore, and Colombo, PTI reported
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