Pahalgam terrorist attacks: Fresh tumult for India-Pakistan trade

On Wednesday, terrorists opened fire on a group of tourists in Pahalgam, killing at least 26 people. While the long-term impact of the latest attack on bilateral trade remains uncertain, past incidents suggest the potential for disruption.  Total merchandise trade between the two nations ranged between $1.8 billion and $2.5 billion during FY09 and FY10. However, amid growing tensions in recent years, India’s exports to Pakistan have sharply contracted since FY20. This followed Pakistan’s suspension of bilateral trade with India in August 2019, in response to India’s decision to revoke Jammu and Kashmir’s special status under Article 370.

 

Imports have seen an even steeper decline, particularly after the Pulwama attack in February 2019. In its aftermath, India withdrew the Most Favoured Nation (MFN) status for Pakistan and imposed a 200 per cent Customs duty on all imports. 

Top exports to Pakistan include cotton, sugar, organic chemicals, pharmaceuticals, iron and steel, and plastics. Major imports from Pakistan include copper, nuts, cotton, plastics, and wool. During the first 10 months of FY25, imports from Pakistan were negligible at just $0.4 million.