In August 2019, when the Indian government led by Prime Minister Narendra Modi abrogated Article 370, Pakistan retaliated. In trying to adopt an ideological posture, it announced ban on trade with India, saying this ban would be revoked only if the status quo ante was restored. After the Pulwama blast some months earlier in February that year, bilateral trade had nosedived after India announced the withdrawal of the Most Favoured Nation (MFN) granted to Pakistan. In a punitive action, along with the withdrawal of MFN status, India had also imposed a 200 per cent tariff on most Pakistani goods.
The net result was that all Pakistani goods became so steeply priced in Indian markets that their demand just dried up in no time due to high costs. The worst hit Pakistanis were those who used Indian medicines, preferring them over much costlier replacements made by western pharmaceutical giants. India, however, did not impose any ban on export of any goods to Pakistan and it was Indian sugar exports that kept the sweetner in the tea of average Pakistani.
Bilateral trade between India and Pakistan had stood at $2.56 billion in 2018-19 and was rising steadily despite the hostilities between them. It suited India fine as its exports amounted to over $2 billion while imports from Pakistan, mainly of cement and fruits, amounted to less than $500 million. Over 60 life saving Indian drugs were sold all across Pakistan and they made the life of average Pakistani easier.
A 2018 World Bank report said that if India and Pakistan were to trade freely, their bilateral trade could rise to at least $37 billion per annum in a matter of years. However, instead of going north, bilateral trade has gone south due to Pakistan fostering terrorism through its proxies in India and the latter retaliating. Incidentally, India’s principled stand announced publicly is that “trade and terrorism can’t go together’’.
The ban on trade with India imposed by the Pakistan government is proving to be well and truly a case of cutting nose to spite the face. The demand for Indian goods remains steady in Pakistan market and their import via Dubai has made them costlier by 25 per cent, according to a report of The Friday Times. Most analysts in Pakistan have been saying that it stands to gain substantially if it resumes trade with India.
According to the latest estimates from trade analysts, Pakistan imported $26.8 million worth of goods from India in February 2025, at least 28 per cent increase from the $20.94 million recorded in February 2024, based on UN COMTRADE data trends. The ban imposed by Pakistan has been ineffective in essence as the Indian goods continue to reach its markets. During the past few years, Pakistan has been trying to find a face-saving formula to resume bilateral trade. However, India has hardly ever bothered to respond to Pakistani overtures even when these came from highly placed politicians like Deputy Prime Minister and Foreign Minister Ishaq Dar.
Speaking at London in March 2024, a year ago, Dar had indirectly admitted the futility of trade ban against India. Dar and his political master, Nawaz Sharif, elder brother of Prime Minister Shehbaz Sharif, have tried to find a way to reconcile with India but so far they have not been able to find a way to do so. In early 2021, the Pakistan government led by Imran Khan had worked out a plan to import sugar from India. However, it developed cold feet soon thereafter once it realised that Sharif brothers, and others, will target him for softening towards India. The boot is on the other foot now with Sharifs unwilling to pay the price of being called “anti-Kashmiri’’ by Imran and his supporters!
“Indian items are shipped via Dubai, Singapore, or Sri Lanka,” said Farah Qureshi, a trade researcher in Islamabad. “It’s costlier—adding 15-25% to prices—but demand persists.” This aligns with posts on X in March 2025, where users noted Indian sugar and medicines arriving via third countries despite the premium.
Bilateral trade with India can boost the Pakistan economy significantly and it is widely believed that many goods will be available in its markets much cheaper than they are presently. It has dawned on Pakistani authorities now that India doesn’t need its markets as much as Pakistani market needs Indian goods.
Farah Qureshi argues that direct bilateral trade could cut costs on essentials like wheat and cotton by at least 20 per cent. She suggests a limited restart with non-sensitive goods. However, India is not enthusiastic about trade ties with Pakistan. “Trade could triple to $7 billion annually if reopened,” estimates Priya Sharma, an economist with a Delhi think tank, citing pre-ban potential. “But India won’t move without security assurances.”
The trade ban imposed by the Pakistan government in a hurry has backfired for it and it is repenting at leisure at its own doing now.
