India-Pakistan Trade Freeze: Economic Implications and Political Backdrop

Trade between India and Pakistan halts as tensions rise following a deadly terror attack in Pahalgam, India. After the attack, India closed the Attari Integrated Check Post and expelled Pakistani attaches, leading Pakistan to suspend trade. Although bilateral trade is minimal, the economic and political ramifications are significant.

The already frail trade relations between India and Pakistan have come to a standstill following a deadly terror attack in Pahalgam that took 26 lives, mostly tourists. In response to the attack, India has shut down the Attari Integrated Check Post and expelled Pakistani military attaches. Pakistan retaliated by suspending all trade, including indirect routes through third countries.

Trade between the two countries has remained minimal since the 2019 Pulwama attack, accounting for just 0.06% of India's total trade. Despite minimal direct economic impact, experts warn of broader geopolitical ramifications affecting regional stability and economic prospects.

India's withdrawal of the Most Favoured Nation status and imposition of heavy import duties have previously disrupted bilateral trade, a situation currently exacerbated by recent border tensions. Nonetheless, informal trade persists through intermediaries, illustrating the enduring demand for Indian goods like chemicals, pharmaceuticals, and agricultural products in Pakistan.

(With inputs from agencies.)