Despite Trade Restrictions, GTRI Estimates Indian Goods Worth $10 Billion Cross Into Pakistan Annually

GTRI noted that Indian exporters first send consignments to intermediary ports. There, independent companies offload the shipments into bonded warehouses and repackage them.

This practice not only helps businesses circumvent restrictions but also enables them to command higher prices.

Source : Freepik

Despite official trade restrictions, Indian products worth over $10 billion are finding their way into Pakistan each year through indirect channels such as Dubai, Singapore, and Colombo, according to estimates from the Global Trade Research Initiative (GTRI).

Explaining the mechanism, GTRI noted that Indian exporters first send consignments to intermediary ports. There, independent companies offload the shipments into bonded warehouses - specialised storage facilities where goods can be held without the payment of duties. During this stage, labels and documents are altered to indicate a different country of origin, reported PTI.

“For example, Indian-made goods may be relabelled as 'Made in UAE',” said GTRI Founder Ajay Srivastava. Once rebranded, the goods are forwarded to Pakistan, bypassing the prohibition on direct trade.

This practice not only helps businesses circumvent restrictions but also enables them to command higher prices. According to Srivastava, "the higher price covers storage, paperwork, and access to a closed market." While the technique occupies a legal grey area, it underlines how businesses often outpace governments in adapting to restrictive trade environments.

GTRI estimated that more than $10 billion worth of Indian goods are rerouted to Pakistan annually through this method.

Sharp Decline in Official Trade Numbers

Official trade relations between India and Pakistan have been minimal since the 2019 Pulwama terror attack, with both nations imposing stiff measures against each other. In the latest blow, exporters expect trade could grind to a complete halt following New Delhi’s closure of the Attari Integrated Check Post after the Pahalgam terror attack, a move that was quickly met by Islamabad's suspension of all trade ties.

Trade data reflected this decline starkly. India’s exports to Pakistan stood at $447.65 million during April-January 2024-25, while imports from Pakistan were a mere $0.42 million.

The previous fiscal year (2023-24) recorded exports of $1.18 billion and imports of $2.88 million. In earlier years too, figures were modest, with India exporting goods worth $627.1 million in 2022-23 and $513.82 million in 2021-22.

Organic chemicals and pharmaceutical products dominated Indian exports during April-January 2024-25, accounting for nearly 60 per cent of the total shipments at $129.55 million and $110.06 million, respectively.

Other significant exports included sugar and confectionery ($85.16 million), petroleum products ($11.63 million), auto components ($28.57 million), and smaller consignments of vegetables, cereals, plastics, rubber, coffee, and spices.

On the import side, India sourced mainly fruits and nuts ($0.08 million), oil seeds and medicinal plants ($0.26 million), along with minor volumes of organic chemicals and project goods.

Fallout from Policy Changes

Relations soured further when India, post-Pulwama, raised import duties to 200 per cent on all Pakistani goods, effectively shutting down imports of fresh fruits, cement, petroleum products, and mineral ore. This move was accompanied by India's decision to revoke Pakistan’s Most Favoured Nation (MFN) status under the World Trade Organisation (WTO) framework.

Although India  accorded MFN status to Pakistan in 1996, Islamabad never reciprocated. Pakistan had, in 2012, committed to offering Non-Discriminatory Market Access (NDMA) instead, but domestic opposition stalled the plan.

Following India's retaliatory tariff hike in 2019, Pakistan suspended almost all trade with India except for a few sectors like pharmaceuticals. Historical figures show that total bilateral trade touched $2.41 billion in 2017-18 compared to $2.27 billion in 2016-17, with India exporting $1.92 billion and importing $488.5 million worth of goods in 2017-18.