In a move aimed at bolstering national security, India has imposed an immediate ban on both direct and indirect imports of goods from Pakistan, citing national security and public policy concerns. The decision, which was officially announced by the Directorate General of Foreign Trade (DGFT) on May 2, comes in the wake of the deadly Pahalgam terror attack that claimed the lives of 26 people, including tourists, in Jammu and Kashmir last month.

This new directive halts all inbound shipments from Pakistan, effectively bringing bilateral trade between the two nations to a complete standstill. India's exports to Pakistan from April to January in 2024-25 were valued at $447.65 million, while imports from Pakistan were a mere $0.42 million.

New Import Restrictions

The notification from the DGFT cites the Foreign Trade Policy (FTP) 2023, which now includes a provision titled "Prohibition on Import from Pakistan." The new regulation prohibits the direct or indirect import or transit of all goods originating in or exported from Pakistan, until further notice.

"Any exceptions to this prohibition will require the approval of the Government of India," the notification read. The measure is framed as a response to rising security concerns following the Pahalgam attack.

Impact on India-Pakistan Trade

Historically, trade between India and Pakistan has been minimal. During the period from April to January 2024-25, Pakistan accounted for just 0.0001% of India’s imports, with products like fruits, medicinal plants, and organic chemicals being the primary imports. The most significant trade item from Pakistan was fruits, valued at $0.08 million.

This ban follows a series of punitive steps taken by India after the terror attack, including the suspension of the Indus Water Treaty and the expulsion of Pakistani military attaches.

The Broader Context

Relations between India and Pakistan have been severely strained in recent years, particularly after the Pulwama terror attack in 2019, which led India to raise import duties on goods from Pakistan to 200%. This heavy tariff effectively halted imports of products such as cement, petroleum, and fruits from Pakistan. Additionally, India withdrew Pakistan's Most Favoured Nation (MFN) status in 2019, further exacerbating trade ties.

In response to these measures, Pakistan also suspended trade with India, including trade through third countries, marking a further breakdown in relations between the two neighboring countries.

Trade Figures and Trade Restrictions

In the fiscal year 2023-24, India’s exports to Pakistan were valued at $1.18 billion, while imports from Pakistan stood at $2.88 million. However, in recent years, both countries have seen a steep decline in trade, a trend exacerbated by ongoing political tensions and security issues.

While the latest ban will not significantly impact India's economy, given the already low trade volume with Pakistan, it marks another chapter in the prolonged breakdown of diplomatic and economic relations between the two countries.

The move is likely to further escalate tensions between India and Pakistan, with Pakistan already having announced the suspension of all trade with India in retaliation.