Wagah-Attari Border Shutdown: What Will Be the Impact on Trade with Pakistan? | TDG Explainer

On April 22, 2025, terrorists launched a fatal attack in Kashmir’s Baisaran Valley, Pahalgam killing 26 individuals, the majority of whom were Hindu tourists. The attack highlighted the ever-present danger of cross-border terrorism. India responded by acting quickly and firmly. The government shut down the Wagah-Attari Border Integrated Check Post (ICP), suspended the Indus Waters Treaty, and downgraded diplomatic relations with Pakistan. These steps reflected India’s zero-tolerance approach to terrorism and conveyed a clear message regarding its determination to protect its borders and citizens.

PM Narendra Modi called an urgent Cabinet Committee on Security (CCS) meeting to seal these retaliatory measures. The Wagah-Attari border, an important trade corridor, closure had a swift and long-term effect. Though the move was crucial for national security, it also resulted in stringent economic implications that will be faced by local and national economies.

Significance of the Wagah-Attari Corridor

The Wagah-Attari crossing is of immense importance for commerce between India and Pakistan. It is just 28 km away from Amritsar, with Attari joining Pakistan’s Wagah. It provides the only legal and monitored overland trading route between both nations. The corridor connects India’s National Highway-1 with Pakistan’s Grand Trunk Road, making it a vital commerce artery for both countries.

India supplies goods such as plastic yarn, red chili powder, vegetables, and soybean meal to Pakistan. It receives gypsum, rock salt, cement, glass, and dry fruits as imports from Pakistan. Even during previous political tensions, the border had not closed down, reflecting a consistent but low economic cooperation between the nations.

Trade Volumes and Economic Disruption

During the financial year 2023–24, trade via the Attari border amounted to ₹3,886.53 crore. The ICP processed 6,871 cargo movements and 71,563 passenger cross-movements. This trade was crucial to the economies of Punjab, Rajasthan, and the surrounding areas. With the Attari border’s closure, thousands of trucks and containers are currently stranded on both sides. Small industries that are dependent on timely import and export of goods face immediate disruption.

For instance, Indian companies exporting commodities such as dry fruits, rock salt, and herbs from Pakistan will now need to find alternatives. This will entail more costly and time-consuming sea routes. Commodities that were being transported in 2–3 days by road now get delayed by over 10 days via sea, with the cost increasing by 30–40%. This substantial rise in price will be a heavy burden for small enterprises that operate on thin profit margins.

Regional Industries and Small Traders Impacted

Small industries in Rajasthan and Punjab have suffered badly due to the closure. Local producers in Ludhiana and Jalandhar rely on raw materials, including plastic granules and gypsum, which are sourced from Pakistan.

Likewise, red chillies from Pakistan are used by Rajasthan-based spice merchants. Since there is no direct land route, these industries have to seek more expensive and time-consuming avenues. Replacement of suppliers may result in cost variations of 25–30%, hitting them hard in the bottom line.

The Gujarat textile sector, dependent on Pakistani herbs, is also uncertain. The disruption is not short-term. The long-term consequences may involve plant shutdowns, layoffs, and increased costs for consumers.

Afghan Transit Trade Stalls

The shutdown has also devastated the Afghan transit trade. India is a leading importer of Afghan products such as almonds, raisins, dry fruits, and spices. They are crucial for India’s food and beverage industry. Afghan traders then have to route their commodities around Chabahar Port, an option which is still poorly developed. Chabahar is slower and costlier compared to Attari, with Customs procedures further elongating the period.

Consequently, Afghan commodities shall become less competitive in the Indian market, incurring losses among wholesalers in metropolises such as Delhi, Mumbai, and Jaipur, who depend on these imports.

Regional Supply Chains Collapse

The Wagah-Attari Border closure has an impact not only on the immediate vicinity but also on local supply chains throughout India. The corridor is used to connect important states such as Punjab, Rajasthan, and Gujarat. Truckers, warehousing companies, and logistics companies in these states now experience a drastic business slowdown. Cities such as Amritsar, Ferozepur, and Bhatinda, which rely on cross-border commerce, will witness a significant slowdown in economic activity.

Logistics personnel and truck drivers who depended on the trade are now out of jobs. The abrupt shutdown has left them without a safety net. Without apparent alternative routes or government assistance, they face an uncertain future.

No Centre Timeline or Contingency Plan

The Indian government has not made any announcement regarding compensation or relief package for industries impacted by the border shutdown as of now. Foreign Secretary Vikram Misri has said that Indian nationals will be permitted to come back from Pakistan until May 1, but there are no plans for restarting trade. The Cabinet Committee on Security gave precedence to national security over trade, which was understandable considering the terrorist attack. But the absence of a contingency plan to counter the economic impact has put businesses in a precarious situation.

The abrupt closure has resulted in legal battles, higher warehousing fees, and terminated contracts. Companies that based their business on the land route are now in disarray, with no quick fix in the horizon.

National Security Comes at an Economic Cost

India’s move to shut down the Wagah-Attari border was an obvious political message, highlighting its determination to fight terrorism. Yet, the economic implications of this move cannot be overlooked. The closure disrupts trade in Punjab, Rajasthan, and Gujarat, as well as small enterprises, local industries, and Afghan traders. The lack of the government’s response in the form of giving relief or an alternative trade route worsens the situation.

There is no well-conceived plan to resume trade or offer relief to affected industries, and this choice may have long-term effects on India’s border economies and regional trade flows. The closure, while necessary for national security, represents a complex challenge for India’s economy that requires swift and effective government action.