Maps
Magazine

TRADE & ECONOMY

Pakistan-India Trade Persists Despite Tensions, Hits 3-Year Import High
Despite tensions & a May clash, Pakistan’s imports from India surged to $211.5M in FY25 — a 3-year high. Exports stayed near zero. Smuggling & informal trade keep flows alive.
ND
by News Desk
2025-07-05
Pakistan-India Trade Persists Despite Tensions, Hits 3-Year Import High

Pakistan’s imports from India reached a three-year high during the first 11 months of the ongoing fiscal year (FY25), despite heightened political tensions and a brief military conflict in May.

According to the State Bank of Pakistan (SBP), imports from India totaled $211.5 million during July–May FY25, exceeding the $207 million recorded in FY24 and $190 million in FY23. This comes amid a continued freeze in formal diplomatic and trade ties between the two countries since 2019.

Even in May, when a brief four-day military clash occurred in the first week, imports from India reached $15 million, only slightly lower than $17 million recorded in May 2024.

In stark contrast, Pakistan’s exports to India remain negligible. Exports stood at just $1,000 in May, with cumulative exports for July–May FY25 at only $0.5 million. In FY24, Pakistan exported $3.44 million, while FY23 saw exports of just $0.33 million, reflecting a heavily one-sided trade relationship.

Trade Quietly Continues

Traders and importers are largely hesitant to speak publicly on the issue, given the political sensitivity. However, one trader suggested that the goods recorded in May may have been shipped earlier or routed through third countries, with payments made prior to the hostilities.

“It may have come from a third country, and the payment for the May imports would have been made before the war,” the trader said on condition of anonymity.

Though official trade appears limited, the actual volume of commerce between the two countries may be much higher than reported.

Unofficial Channels Dominate

The Global Trade Research Initiative (GTRI), an India-based think tank, estimates that unofficial Indian exports to Pakistan total around $10 billion annually, routed primarily through Dubai, Colombo, and Singapore.

Industry insiders and economic analysts also point to the continued inflow of smuggled goods into Pakistan from India and other neighboring countries.

“We should not ignore smuggling from India since the cost of production in Pakistan is the highest in the region, which creates space for goods from India, China, and Bangladesh,” said one exporter.

Pakistan’s high cost of production and its industrial reliance on imported inputs continue to fuel the demand for foreign goods, even when formal trade mechanisms are suspended.

Political Freeze, Economic Reality

Formal trade ties between India and Pakistan were severed in August 2019 after India revoked Article 370, which granted special status to Jammu and Kashmir. Since then, no significant diplomatic or commercial breakthroughs have been made.

However, the data and economic trends suggest that economic interdependence between the two neighbors continues, albeit largely unofficially and quietly.

With geopolitical dynamics constantly shifting, both countries appear to be locked in a paradox—diplomatically disengaged but economically entangled.

 
Tagged:

PakistanEconomy

CrossBorderTrade

IndiaPakistanTrade

InformalTrade
Share News: