India-Pakistan Trade Freeze: Economic Implications and Diplomatic Tensions

Following the Pahalgam terror attack, India and Pakistan's trade relations have come to a standstill as both countries have suspended trade ties. This diplomatic fallout affects a range of sectors, with significant economic implications, despite the already minimal bilateral trade between the two nations.

India and Pakistan have halted all bilateral trade after recent terror attacks, causing diplomatic strain. New Delhi's decision to close the Attari Integrated Check Post was followed by Islamabad's move to suspend trade ties. Exporters fear economic repercussions, noting that trade was already minimal after past conflicts.

The Pahalgam incident, which claimed 26 lives, prompted India to expel Pakistani military attaches and suspend the Indus Water Treaty. As tensions rise, Islamabad responded by cutting off trade entirely. This disruption may impact India's exports to Afghanistan, exacerbating economic challenges for both South Asian neighbors.

Despite the dire trade outlook, alternative routes through third countries like the UAE and Singapore continue to facilitate indirect commerce. India's exports to Pakistan were already facing decline, representing a mere fraction of total trade. Consequently, the prolonged diplomatic tensions could further stagnate economic relations in the region.

(With inputs from agencies.)