India And Pakistan Trade To Skid To A Halt: Indian Export Body

With Pakistan suspending all trade ties with India, including that routes through third countries, the two-way commerce will now come to a complete halt, apex exporters' body Federation of Indian Export Organisations said on Thursday.

Following the terror attack in Pahalgam on Tuesday, which killed 26 people, mostly tourists, India took a series of measures including immediate shutting down of the Attari land-transit post, used for movement of certain kinds of goods.

Besides, India has announced expulsion of Pakistani military attaches, and suspension of the Indus Water Treaty of 1960.

In retaliation, Pakistan announced suspension of 'all trade' with India, including that routes through third countries.

Commenting on the decision of the neighbouring country, Federation of Indian Export Organisations President S C Ralhan said India's bilateral trade with Pakistan is miniscule and is just 0.06% of India's total trade.

"We have minuscule trade with Pakistan, which is constantly declining. During April-January 2024-25, the same was not even $500 million as against the overall trade of over $800 billion in the same period. The trade will now come to a complete standstill affecting supply of some key products to Pakistan, hitting their economy further," Ralhan told PTI.

Terrorists opened fire in Pahalgam in the deadliest attack in the Valley since the Pulwama strike in 2019.

India's exports to Pakistan in April-January 2024-25 stood at $447.65 million, while imports were meagre $0.42 million. The exports and imports in 2023-24 were $1.18 billion and $2.88 million, respectively.

In 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 2024-25, exports of organic chemicals and pharmaceutical products accounted for about 60% of the country's total outbound shipments to Pakistan. It was $129.55 million and $110.06 million, respectively.

The other items include sugar and sugar confectionary ($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).

The main imports include fruits and nuts ($0.08 million), certain oil seeds and medicinal plants ($0.26 million), organic chemicals, and project goods.

Usually, the consignments from India move via Dubai port to Pakistan.

The India-Pakistan trade relations soured after the Pulwama terror attack in 2019.

Following that, India raised the import duty to 200% on all goods imported from the neighbouring country, including fresh fruits, cement, petroleum products and mineral ore.

In 2017-18, Pakistan's exports to India was $488.5 million. India also withdrew most favoured nation status to Pakistan.

That time the two main items imported from Pakistan were fruits and cement. Slapping an import duty of 200% effectively means almost banning the imports.

The country invoked a security exception clause of the World Trade Organization to withdraw the MFN status. Both the countries are member of this organization.

India had granted the MFN status to Pakistan way back in 1996, but the neighbouring country had not reciprocated.

Under the MFN pact, a WTO member country is obliged to treat the other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

In 2012, Pakistan had committed to giving the MFN status to India but retracted later due to domestic opposition. Instead of MFN, Pakistan said it was working on granting Non-Discriminatory Market Access status to India but that also was not announced.

Pakistan too in August 2019 suspended trade ties with New Delhi following imposition of the heavy import duty by India on imports from Pakistan.

Both countries have a long history of strained relations, primarily due to the Kashmir issue as well as the cross-border terrorism emanating from Pakistan.

Total India-Pakistan trade in 2017-18 was $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.

Meanwhile, FIEO has cancelled its managing committee meeting, which was scheduled for April 28 in Kashmir due to tensions in the valley following terror attack at Pahalgam.

An official of the FIEO said that about 25 members were scheduled to attend the meeting.

"We were planned to discuss issues related to FIEO's internal matters and international trade. But now we have cancelled that," the official said.

Set up in 1965 by the commerce ministry, the federation facilitates redressal of exporters' problems by taking them up with the authorities concerned, besides promoting the country's trade.