Trade Suspended, Airspace Shut: How India Plans To Cripple Pakistan's Economy

Last Updated:May 03, 2025, 14:22 IST

India's ban on all imports from Pakistan is expected to deal a crushing blow to Pakistan's economy. India has also closed its ports and airspace for Pakistani ships and airlines.

Trade between India and Pakistan has come to a complete halt after the Pahalgam terror attack. (PTI)

India has intensified its diplomatic offensive against Pakistan in the wake of the devastating terror attack in Jammu and Kashmir’s Pahalgam on April 22 by suspending all imports from the neighbouring country, while also closing its ports and airspace for Pakistani ships and airlines.

As speculation grows over a possible Indian retaliation for the barbaric attack last week that claimed the lives of 26 tourists, India is pulling out all stops to make sure Pakistan pays for allowing cross-border terrorism, not by its military might but by engaging in a series of diplomatic offensives to isolate the country.

The diplomatic actions by India are already impacting Pakistan’s economy. Immediately after the terror attack, India suspended the Indus Waters Treaty, which will hurt Pakistan in terms of its agriculture and water supply. Now, India’s ban on all imports from Pakistan is expected to impact several Pakistani sectors.

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India’s Latest Diplomatic Action On Pakistan

India imposed a ban on all direct or indirect import of all goods from Pakistan with immediate effect in the interest of national security and public policy, according to a government order. This will completely halt all inbound shipments of goods from Pakistan to India.

India also banned all Pakistani-flagged ships from entering its ports and also prohibited all Indian ships from entering Pakistani ports. The Ministry of Ports, Shipping and Waterways said the decision has been taken to ensure safety of Indian assets, cargo and connected infrastructure, and in the interest of Indian shipping.

India has also closed its airspace to all flights operated by Pakistan-based airlines, in a tit-for-tat response to the decision taken by Pakistan to shut its airspace for Indian flights last week. Flights of Pakistan Airlines, the national carrier, are being rerouted via China for destinations like Kuala Lumpur, leading to added time and costs.

How This Will Affect Pakistan’s Economy

It is worth mentioning that trade between India and Pakistan has already been negligible since the Pulwama attack in 2019. India’s exports to Pakistan in April-January 2024-25 stood at $447.65 million, while imports were a meagre $0.42 million.

In 2023-24, India’s exports were $1.18 billion, and imports were $2.88 million – barely 0.1% of its total global trade. India has mainly imported fruits and nuts ($0.08 million), certain oil seeds and medicinal plants ($0.26 million) and organic chemicals during the April-January 2024-25 period.

However, there are several Pakistani industries who rely heavily on specific Indian imports, particularly organic chemicals ($129.55 million) and pharmaceutical products ($110.06 million). Other industries include:

With India already having closed the Attari land-transit post that was used for the movement of most goods, the latest halt is likely to disrupt Pakistan’s pharmaceutical, chemical and food sectors and deal a crushing blow to the economy of a country, which is already reeling under food inflation and shortage. India is also keeping an eye on third-party routes like Dubai to ensure Pakistan does not export through such routes.

India’s ban on Pakistani ships will also deal a heavy blow to its economy as those ships will now have to reroute via alternative ports, which will increase transit time and costs. It will also cause Pakistani ports to lose revenue from docking fees, storage and other shipping-related services.

India’s airspace closure for Pakistani airlines will affect flight durations with implications for fuel consumption, scheduling and ticket pricing. Many of Pakistan’s commercial flights to the Gulf, Southeast Asia, and beyond, including key routes such as Karachi to Kuala Lumpur or Dubai, rely heavily on access to Indian airspace, which will now be forced to reroute over Iran, Afghanistan or Central Asian countries.

This is expected to be particularly severe for Pakistan Airlines (PIA), the country’s national carrier, which is already struggling under mounting financial pressure.

(with PTI inputs)

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