India Bans All Imports From Pakistan After Pahalgam Attack

India has banned direct or indirect import of all goods from Pakistan with immediate effect in the interest of national security and public policy, following the Pahalgam terror attack last month which killed 26 tourists, according to a government order.

The decision will completely halt all inbound shipments of goods from Pakistan to India. India's exports to Pakistan in April–January of financial year 2024–25 stood at $447.65 million, while imports were a meagre $0.42 million.

A provision in this regard has been added in the Foreign Trade Policy 2023 "to prohibit direct or indirect import or transit of all goods originating in or exported from Pakistan with immediate effect until further orders", the Directorate General of Foreign Trade said in a notification dated May 2.

It added that the restriction is imposed in the interest of national security and public policy. Any exception to this prohibition will require approval of the Government of India, the order said.

Inserting the provision under the heading Prohibition on Import from Pakistan in the trade policy, it said: "Direct or indirect import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, shall be prohibited with immediate effect, until further orders."

Main imports from the neighbouring country during April–January of financial year 2024–25 included fruits and nuts ($0.08 million), certain oil seeds and medicinal plants ($0.26 million), and organic chemicals.

The decision follows a terror attack in Pahalgam on April 22, in which 26 people were killed.

Following the terror attack, India took a series of measures including the immediate shutdown of the Attari land-transit post, used for movement of certain kinds of goods. India also announced the expulsion of Pakistani military attachés and suspended the Indus Waters Treaty of 1960.

Due to this, trade between India and Pakistan has already come to a complete halt. Two-way trade between the countries was already minimal following steps taken by both sides after the Pulwama terror attack in 2019.

In retaliation, Pakistan announced suspension of all trade with India, including to and from any third country through Pakistan.

Exports and imports in financial year 2023–24 were $1.18 billion and $2.88 million, respectively.

In financial years 2022–23 and 2021–22, India exported goods worth $627.1 million and $513.82 million, and imported products worth $20.11 million and $2.54 million, respectively.

In April–January of financial year 2024–25, exports of organic chemicals and pharmaceutical products accounted for about 60% of India's total outbound shipments to Pakistan. These stood at $129.55 million and $110.06 million, respectively.

Other items included sugar and sugar confectionery ($85.16 million), certain vegetables ($3.77 million), coffee, tea and spices ($1.66 million), cereals ($1.39 million), petroleum products ($11.63 million), fertiliser ($6 million), plastics ($4.16 million), rubber ($1.88 million), and auto components ($28.57 million).

India-Pakistan trade relations soured after the Pulwama terror attack. India raised import duty to 200% on all goods imported from Pakistan, including fresh fruits, cement, petroleum products and mineral ore.

In financial year 2017–18, Pakistan's exports to India were $488.5 million. India also withdrew most favoured nation (MFN) status to Pakistan.

That year, the two main items imported from Pakistan were fruits and cement. Slapping an import duty of 200% effectively amounted to banning imports.

India invoked a security exception clause of the World Trade Organisation to withdraw the MFN status. Both countries are members of the global trade body.

India had granted MFN status to Pakistan in 1996, but Pakistan never reciprocated.

In 2012, Pakistan had committed to granting MFN status to India but retracted later due to domestic opposition. Instead, it said it was working on granting non-discriminatory market access but that too was never announced.

Pakistan suspended trade ties with New Delhi in August 2019, following India’s import duty hike on Pakistani goods.

Both countries have a long history of strained relations, largely due to the Kashmir issue and cross-border terrorism.

Total bilateral trade in financial year 2017–18 stood at $2.41 billion as against $2.27 billion in 2016–17. India imported goods worth $488.5 million in 2017–18 and exported goods worth $1.92 billion.