The attack on April 22, in which terrorists targetted innocent tourists, has pushed the already fragile India-Pakistan relationship to a new low.

Amid escalating tensions following the deadly terror attack in Jammu and Kashmir's Pahalgam, India has officially suspended all trade ties with Pakistan, marking a complete economic disconnect between the two neighbours. This move comes as part of New Delhi's strong diplomatic and economic response to Islamabad, which it holds responsible for harbouring terrorism.

The attack on April 22, in which terrorists targetted innocent tourists, has pushed the already fragile India-Pakistan relationship to a new low. In response, the Indian government announced an outright suspension of bilateral trade, including the already limited imports and exports between the two countries.

Trade already on a decline since Pulwama:

This latest action is not entirely unexpected, as trade relations between India and Pakistan had been deteriorating since the 2019 Pulwama terror attack. After that incident, India imposed a steep 200% import duty on goods coming from Pakistan. Trade through the Attari Land Port dropped from Rs 4,370 crore in 2018-19 to Rs 2,772 crore in 2019-20.

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Pakistan stares at bigger economic blow:

While the immediate question arises about the impact of this trade halt on India, experts suggest that Pakistan will bear the brunt more severely. With inflation already soaring and foreign reserves shrinking, Pakistan's economic outlook is precarious. The country is highly dependent on external financial support, including IMF loans, to stay afloat.

The trade statistics underline the asymmetry: In FY 2021-22, India exported goods worth $513.82 million to Pakistan, while importing only $2.54 million. This trend continued, with Indian exports surging to $1,180 million in FY 2023-24, even as imports from Pakistan shrank to just $2.88 million. In essence, less than 0.06% of India's total trade is with Pakistan, making the impact on the Indian economy negligible.

What India imports and exports

Goods imported by India from Pakistan have included seasonal fruits like watermelon and muskmelon, cement, dry fruits, rock salt, and limited industrial and chemical products. On the other side, Pakistan heavily relies on Indian exports such as fruits, vegetables, tea, spices, pharmaceuticals, plastic products, salt, motor parts, and dairy goods.