Islamabad’s decision to halt all commercial exchange with New Delhi, including indirect routes through hubs like Dubai, is anticipated to have a considerably greater impact on Pakistan than on India, sources indicate. Pakistan reportedly maintains a higher dependency on trade flows from its neighbour.
Finding equally competitive alternative suppliers is likely to pose a challenge for Pakistan, particularly concerning essential goods such as medicines and certain organic chemicals. The geographical closeness of India previously offered a logistical and cost advantage, even when shipments were routed through the UAE.
This is not the first instance of trade disruption between the two nations. Pakistan previously suspended trade in 2019 following heightened tensions, though it later incrementally allowed imports of specific items. Experts recall that within a short period of the 2019 suspension, Pakistan permitted the import of pharmaceuticals and their raw materials from India. Approximately 18 months later, sugar, cotton, and yarn were also added to the list of permissible imports. Observers suggest a similar pattern of gradually easing restrictions could emerge again.
Conversely, Indian exporters are not expected to face significant repercussions. Exports to Pakistan constitute a very minor fraction of India’s total export volume. Data from April 2024 to January 2025 shows India’s exports to Pakistan were valued at just $455 million, a negligible sum compared to India’s total exports of $358.63 billion during the same timeframe. Imports from Pakistan during the initial ten months of the fiscal year were even lower, at only $50 million.
Despite the formal restrictions, an increase in the informal movement of goods is anticipated. This unofficial trade, largely conducted through Dubai, is already believed to be significantly larger than the formal trade volume. Reports suggest that a substantial value of goods originating from India reaches Pakistan annually via Dubai, often relabeled as products from the UAE. This informal flow is expected to expand further in the current scenario.
