In anticipation of the continuing prohibition on Pakistani imports, India’s customs authority is in top gear to thwart Pakistan’s efforts to enter the Indian market via third countries such as the UAE, Singapore, Sri Lanka, or Indonesia, knowledgeable sources reported Sunday. The said countries are being utilized as conduits to reroute and rebadge Pakistani commodities in a bid to circumvent the ban.
Pakistani Products Being Refurbished
In spite of the formal prohibition against direct imports from Pakistan, fruits, dry dates, textiles, soda ash, rock salt, and leather products worth an estimated $500 million are still repackaged and routed through third countries to enter the Indian market.
Sources privy to the situation pointed out that although Pakistan’s direct imports to India are negligible, these items are still entering the market from other nations and are cutting through India’s trade bans. On May 2, the government brought an order which prohibited all direct and indirect imports from Pakistan as a measure to prevent further violations.
India’s Strategic Move to Choke Pakistan’s Exports
The action is intended to add further pressure on Pakistan’s weak economy. “The plan is to strangle Pakistani exports since Pakistan’s economy is already crippled and weak,” a source said.
The prohibition is one of a set of measures to economically isolate Pakistan, after India had withdrawn the Most Favoured Nation (MFN) status given to Pakistan in 2019, in the immediate aftermath of the Pulwama terror attack. This attack, in which 40 CRPF men were killed, was traced back to Pakistani-supported militants, and India responded by imposing a 200% import duty on imports from Pakistan.
The Decline of Indo-Pakistani Trade
As the tariff was slapped, direct shipments from Pakistan into India have lessened considerably. Official statistics demonstrate that Pakistani importations, with a value of $2.39 million back in 2020-21, have gone down sharply to merely $0.42 million during the initial 10 months of FY 2024-25.
The 200% tariff practically made Pakistani products uncompetitive in India, and imports from Pakistan into India fell by more than 90%. Most important sectors like horticulture, cement, salt, and cotton yarn were the worst affected by this economic blow.
The DGFT Notification: A Stricter Stand on Pakistani Imports
On May 5, the Directorate General of Foreign Trade (DGFT) released a notice forbidding any kind of imports from Pakistan—direct or indirect through third nations. The notice establishes that government agencies have to increase surveillance and enforcement to prevent illegal imports.
This limitation is done in the national security interest and public policy. Any deviation from this prohibition shall be subject to prior clearance by the Government of India,” the DGFT order said.
The policy step comes after the terrorist attack at Pahalgam on April 22 that left 26 dead. The attack, said to be of Pakistan-based terrorists, further added to India’s determination to slap stringent trade restrictions.
Bilateral Trade Decline Post 2018-19
India’s business with Pakistan declined since the year 2018-19 financial. India’s exports to Pakistan dropped by over 60% in the years that followed government statistics, whereas Pakistani exports to India dropped sharply by almost 97%.
Despite the fact that Pakistan still purchases critical items such as medicines, sugar, and chemicals from India through third-market routes, structured trade between these two countries is virtually nonexistent.
