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Over $500 million worth of Pakistani goods continue to be repackaged and relabeled in a third country to gain access to the Indian market. This practice allows these items to bypass restrictions and enter India under different labels, highlighting the ongoing trade dynamics in the region.
Pakistani merchandise, the Ind Customs Department has heightened its vigilance to prevent any attempts by Pakistan to access the Indian market through third-party countries. Sources revealed that the department is closely monitoring regions like the United Arab Emirates (UAE), Singapore, Indonesia, and Sri Lanka, which could potentially serve as routes for Pakistani goods trying to bypass the ban. This increased scrutiny aims to ensure that trade restrictions are upheld and prevent any indirect trade linkages with Pakistan.
At least $500 million worth of Pakistani goods—including fruits, dry dates, textiles, soda ash, rock salt, and leather items—are currently being repackaged and relabelled in a third country in order to gain access to the Ind market. Sources familiar with the situation, who spoke on the condition of anonymity, revealed this information, citing the confidentiality of the matter.
Ban on Direct and Indirect Imports from Pakistan
In a decisive move to curb Pakistan’s economic activity, the Indian government issued an order on May 2, banning all direct and indirect imports from Pakistan. While Ind imports from Pakistan through official channels have been minimal, goods from the neighboring country have continued to enter India via third-party nations.
The new ban is seen as an effort to weaken Pakistan’s economy, which is already in a fragile state. According to sources, the objective behind the ban is to cut off Pakistani exports, further straining its economic situation.
This action comes after a significant blow to Pakistan’s economy when India revoked its Most Favoured Nation (MFN) status in February 2019, following the Pulwama terror attack. Ind had cited “incontrovertible evidence” of Pakistan’s direct involvement in the attack, which resulted in the tragic deaths of CRPF jawans.
India Imposes 200% Customs Duty on Pakistani Imports, Leading to Drastic Decline in Trade
In a major move, New Delhi imposed a 200% customs duty on imports from Pakistan, effectively halting direct trade between the two nations. This decision came in the wake of the withdrawal of Pakistan’s Most-Favored-Nation (MFN) status, which was a significant blow to bilateral trade relations.
According to official sources, imports from Pakistan, which were valued at $2.39 million in the fiscal year 2020-21, have plummeted to a mere $0.42 million in the first 10 months of 2024-25. The sharp decline highlights the significant impact of the new tariff measures.
“The 200% tariff has rendered direct imports from Pakistan commercially unviable, causing a staggering drop of over 90% in Pakistan’s exports to India within just a year,” an official stated. Key sectors such as horticulture, cement, salt, and cotton yarn were among the hardest hit by the trade freeze.
In light of this, the official added, “Terror and trade can’t coexist,” underscoring India’s stance on the need for a secure environment for economic cooperation. This development marks a new chapter in the strained economic ties between the two neighboring countries, with trade taking a substantial hit.
The Directorate General of Foreign Trade (DGFT) issued a notification on Friday evening, placing a ban on all imports from Pakistan, whether directly or through a third country. Government agencies have been instructed to maintain strict vigilance to enforce this order. According to a source, the directive aims to empower customs and other field agencies to take action against Pakistani products entering through nations with closer ties. This move is expected to further strengthen monitoring and enforcement at various checkpoints.
The Directorate General of Foreign Trade (DGFT), an agency under the Ministry of Commerce and Industry, has imposed a restriction that aims to bolster national security and public policy. According to the official order, any exceptions to this restriction will require prior approval from the Government of India. This move is part of New Delhi’s continued response to the Pakistan-sponsored terrorist attack on tourists in Pahalgam on April 22, which tragically claimed the lives of 26 individuals.
India-Pakistan Bilateral Trade Sees Notable Figures in FY25
According to recent government data, Pakistan’s imports from India reached a significant $448 million during the April-January period of the FY25. These imports primarily included essential medicines, sugar, chemicals, auto components, and petroleum products, highlighting the continued trade flow between the two neighboring countries.
In contrast, India’s imports from Pakistan in the 2023-24 financial year were considerably lower, amounting to only $3 million. This small import value mainly comprised agricultural commodities.
However, Pakistan’s imports from India in FY24 were considerably higher, valued at $1.2 billion. This underscores India’s key role as an important trading partner for Pakistan, despite political and economic challenges. The data reflects the ongoing interdependence between the two nations in terms of essential goods and services.
As bilateral trade continues to evolve, these figures indicate both challenges and opportunities for future economic engagement between India and Pakistan.
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Sharp Decline in Indo-Pak Bilateral Merchandise Trade Post 2018-19
Bilateral merchandise trade between India and Pakistan has witnessed a dramatic decline since 2018-19. In FY19, India exported goods valued at $2.07 billion to Pakistan, while imports from Pakistan amounted to $495 million. However, the following financial year saw a severe drop in trade, with Indian exports to Pakistan plummeting by 60.5%, falling to just $817 million. Simultaneously, Pakistani exports to India saw an even steeper decline, dropping by 97.2% to a mere $14 million.
Historically, India imported a variety of goods from Pakistan, including mineral oil, copper, edible fruits and nuts, salt, sulphur, plastering materials, cotton, and raw hides and skins. On the flip side, India’s exports to Pakistan included cotton, chemicals, prepared animal fodder, vegetables, plastic articles, dairy products, pharmaceuticals, and sugar.
Despite the decline in official trade, Pakistani consumers continue to purchase Indian goods such as medicines, chemicals, sugar, and food products through informal channels, often via third countries like the UAE or Singapore. This trend is driven by the superior quality and competitive pricing of Indian products
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