Trade ties between India and Pakistan have long remained minimal, but recent geopolitical tensions have dealt another blow to their already fragile relationship. The recent Pahalgam terror attack prompted India to scale down diplomatic relations with Pakistan and suspend the Indus Water Treaty. In response, Pakistan halted all trade with India, further widening the economic gap between the two nations.
Experts note that this disruption is likely to hurt Pakistan more, particularly in sectors where it depends heavily on Indian imports—namely pharmaceuticals and chemicals. These are critical areas for Pakistan, and India has historically played a dominant role in fulfilling this demand.
According to official data, India’s exports to Pakistan plummeted by 56.91% year-on-year between April 2024 and February 2025, standing at $491 million. During the same period, there were no recorded imports from Pakistan. To put it in perspective, India’s total merchandise exports for FY25 amounted to a whopping $437.42 billion.
Among the top Indian exports to Pakistan in FY25 were drug formulations, sugar, bulk drugs, residual chemicals, and auto components. While India’s exports to Pakistan had reached a high of $2.06 billion in FY19, with imports totaling $495 million, trade volumes have been on a downward spiral since then. Even in FY24, India exported $1.18 billion worth of goods to Pakistan, with imports dropping to just $3 million.
Historically, Pakistan’s exports to India have included items such as Ayush and herbal products, spices, and fresh fruits. However, these constitute a very small slice of India’s massive trade portfolio.
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), noted that while exports to Pakistan are crucial for the latter—especially in pharma and chemical sectors—they account for just 0.06% of India’s total foreign trade.
This isn’t the first time bilateral trade has been disrupted. After the Pulwama terror attack in 2019, India revoked Pakistan’s Most Favoured Nation status, prompting Pakistan to cut trade ties.
Interestingly, despite the formal suspension of direct trade, indirect trade continues to thrive. A recent report by the Global Trade Research Initiative highlighted that India’s indirect exports to Pakistan amount to over $10 billion annually, routed through trade hubs like Dubai, Singapore, and Colombo to bypass restrictions.
