KKN Gurugram Desk | In a decisive move aligned with its zero-tolerance policy against terrorism, the Government of India has imposed a complete ban on the import and transshipment of goods originating from Pakistan, including those rerouted through third countries. The decision, triggered by the recent terrorist attack in Pahalgam, Jammu & Kashmir, is expected to exert substantial pressure on Pakistan’s already fragile economy and close loopholes in the existing trade network.

The order, issued through a notification by the Ministry of Commerce and Industry on May 2, was swiftly followed by strict enforcement action from Indian customs authorities. Even shipments en route at sea prior to the notification are now under scrutiny, reflecting the seriousness of India’s stance.

Key Highlights

• India bans all goods originating from Pakistan, including via third countries like UAE

• Move follows April’s terror attack in Pahalgam that killed 26 civilians

• Directorate of Revenue Intelligence (DRI) leading enforcement with tight port surveillance

• Even consignments with valid third-country certificates now being scrutinized

• Pakistan’s export channels facing a severe disruption

• Bilateral trade volume already slashed since the 2019 Pulwama attack

Why India Imposed the Trade Ban Now

On April 24, 2025, India closed the Attari Integrated Check Post (ICP), halting all direct trade with Pakistan. Just days later, the May 2 notification expanded the scope by banning:

• Direct imports from Pakistan

• Indirect imports or transshipment through third countries (such as UAE, Oman, Singapore)

The decision was catalyzed by the Pahalgam terrorist attack, which Indian intelligence agencies have linked to Pakistan-based terror outfits. According to government sources, Pakistan was suspected of circumventing trade bans by using third-party nations to route its goods into India.

Zero Tolerance for Terror-Linked Trade

This trade ban reflects a broader policy shift under India’s zero-tolerance framework toward countries involved in state-sponsored terrorism.

A senior Ministry official stated:

“We cannot allow even indirect economic benefits to reach entities connected with terror infrastructure. This ban is part of a broader economic and strategic response.”

DRI Enforcement: Action at Ports and Customs

The Directorate of Revenue Intelligence (DRI), under the Ministry of Finance, has started intercepting and inspecting shipments suspected to have originated in Pakistan—even if they arrive labeled as UAE or Oman exports.

Notable Actions:

• Cargo vessels suspected to be carrying Pakistani origin goods have been denied docking permission

• Origin certificates, packaging labels, and shipping documentation are being rigorously scrutinized

• Shipments of dry fruits and dates routed via UAE have come under the radar

A customs official quoted by The Indian Express confirmed:

“Wherever there’s doubt, we are stopping cargo. This includes shipments that were already at sea before the ban came into effect. Security takes precedence.”

‘Rule of Origin’ Certificates Under Scanner

One of the challenges for enforcement authorities is the ‘Rule of Origin’ certification, which often masks the true source of goods. Officials revealed that despite documentation from UAE, certain products—especially dry fruits, spices, and pink Himalayan salt—have signs of Pakistani origin.

Current concerns include:

• Dates and dry fruits falsely labeled as UAE products

• Medicinal herbs and salt from Gilgit-Baltistan rerouted via Central Asia

• Packaging and branding inconsistencies triggering red flags

India has reportedly raised these concerns with UAE, asking for better transparency and verification of export data.

Impact on Pakistan’s Economy

This trade disruption comes at a time when Pakistan’s economy is already reeling from high inflation, IMF scrutiny, and depleting foreign reserves.

According to Global Trade Research Initiative (GTRI):

• An estimated $10 billion worth of Indian goods transit through third countries to reach Pakistan

• The ban on indirect trade channels could cripple informal export earnings for Pakistan

• The move will increase transaction costs and delay delivery timelines, affecting competitiveness

Historic Context: India-Pakistan Trade Trends

Before Pulwama (2019):

• Bilateral trade stood at ₹4,370.78 crore (~$600 million)

After MFN Withdrawal (2019):

• Trade dropped to ₹2,257.55 crore (~$300 million) by 2022-23

Recent Uptick (2023-24):

• Reached ₹3,886.53 crore, highest in 5 years

• Surge largely due to indirect trade via Gulf countries

However, with the current enforcement, even this modest recovery is expected to reverse drastically.

India’s Trade Numbers vs Pakistan

• India’s total merchandise trade (2023-24): $430 billion

• Pakistan’s total trade volume: $100 billion

• India’s exports to Pakistan (Apr 2023 – Jan 2024): $447.6 million

• Imports from Pakistan: Less than $0.5 million

  • Key items: figs, herbs (basil, rosemary), chemicals, and Himalayan pink salt

The trade imbalance clearly shows that India is in a position to unilaterally restrict trade without substantial economic fallout.

Atari ICP Closure and Its Significance

On April 24, India shut the Atari Integrated Check Post, which had served as the only direct land route for India-Pakistan trade. The closure marked the end of any formal trade movement via Punjab, impacting:

• Fresh produce

• Construction material

• Livestock feed

• Handicrafts and textiles

With this, both direct and indirect channels of commerce with Pakistan are now blocked, demonstrating India’s coordinated economic retaliation.

International Trade Implications

Analysts believe that India’s strong stance will:

• Pressure third-party countries to comply with origin transparency

• Set a precedent for economic deterrence against state-sponsored terror

• Encourage domestic producers and alternative supply sources to step up

However, concerns remain about smuggling and informal border trade, which authorities are now addressing with enhanced surveillance and customs tech integration.

Expert Opinion: What This Means Strategically

Dr. Sanjeev Mehta, Geopolitical Analyst

“This is not just a trade move—it’s a message. India is saying that you can’t hide behind proxies or paperwork. Every rupee linked to terrorism will be stopped.”

Shazia Noor, Trade Analyst (Karachi)

“Pakistan’s exporters have long depended on third-country routing to survive sanctions. This ban could disrupt small and medium enterprises that rely on the Indian market indirectly.”

India’s Long-Term Economic Security Strategy

This action aligns with India’s larger national security-economic doctrine, which includes:

• Cutting off terror-linked funding routes

• Curtailing illegal border trade networks

• Strengthening strategic imports substitution

• Using trade policy as a diplomatic tool

India’s complete ban on goods linked to Pakistan, even when rerouted through third countries, marks a new era in trade policy as a counter-terror strategy. By disrupting economic incentives for Pakistan, New Delhi is sending a clear message to both adversaries and allies: national security and economic interests are inseparably linked.

With enforcement tightening and diplomatic signals loud and clear, the pressure on Pakistan’s export economy is only expected to intensify in the months ahead.