On paper, trade between India and Pakistan has all but stopped. In practice, Indian medicines, chemicals, sugar and auto parts still turn up on Pakistani shelves and factory floors, usually after a detour through a third country.
The formal break dates to 2019. After the Pulwama attack, India withdrew most favoured nation status from Pakistan, and Pakistan suspended almost all trade with India in August 2019, exempting only critical sectors like pharmaceuticals. Last year’s Pahalgam terror attack brought a harder line. India closed the Attari check post and banned the direct or indirect import or transit of goods originating in or exported from Pakistan. On 4 May 2025, Pakistan suspended all trade with India, including via third countries.
The numbers show how lopsided the relationship was. From April 2024 to January 2025, the last full pre-ban period, India exported $447.65 million to Pakistan, while Pakistan’s exports to India were just $0.42 million. Pakistan’s dependence on Indian supply runs deeper in particular sectors. Before the 2019 freeze, Pakistan relied on India for $550.33 million in cotton and $457.75 million in chemicals annually in 2018-19, according to India’s commerce ministry.
The backdoor
When the front door shut, the trade moved to the side entrance. The think tank Global Trade Research Initiative (GTRI) says Indian goods worth over $10 billion reach Pakistan every year indirectly through ports such as Dubai, Singapore and Colombo. That figure is GTRI’s estimate and not an official statistic.
GTRI describes how it works. Indian firms send goods to these ports, where an independent firm offloads the consignment and stores it in a bonded warehouse, a place where goods can sit duty-free while in transit. The paperwork is then redone. GTRI founder Ajay Srivastava says Indian-made goods may be relabelled as ‘Made in UAE’ before being shipped to Pakistan. Its example is an exporter that sends auto parts worth $100,000 to Dubai, relabels them as UAE products and sells them on to Pakistan at $130,000.
The goods involved are everyday necessities. GTRI lists pharmaceuticals, chemicals, cotton, tea, coffee, dyes, onions, tomatoes, iron, steel, sugar, salt and auto parts among Indian products Pakistan imports through third countries. Medicines matter most, since Pakistan’s pharmaceutical industry depends on imported raw materials, and the 2019 exemption reflected that.
The price of the detour
Pakistani buyers pay more for the roundabout route. A trade researcher in Islamabad told The Friday Times that the detour via Dubai, Singapore or Sri Lanka adds 15 to 25 per cent to prices, “but demand persists.” The same report says Pakistan’s Foreign Minister Ishaq Dar acknowledged in March 2024 that goods keep coming through indirect routes at a higher cost. GTRI reached the same conclusion when the Attari post closed: border closures halt formal trade but not demand, and Pakistan will keep sourcing Indian goods at a higher cost through third countries.
The latest numbers
Fresh data suggest the pull has strengthened rather than faded. Pakistan imported goods worth $61.74 million, or Rs 5,876 crore, from India in the first quarter of 2026-27. That is a 69 per cent rise, and it came while direct trade remained suspended. Reports tie the flow to medicines, chemicals and plastics. The official data do not say how the goods travelled, and the explanation offered in reports is the third-country route.
What it says about the two economies
The pattern shows how hard it is to rule trade by decree when two neighbours share a border, a supply chain and decades of established buyers and sellers. Pakistani industry needs Indian inputs that domestic production cannot easily replace, and some Indian exporters are happy to supply them at a premium. The people most affected are consumers and manufacturers in Pakistan, who pay more for the same goods, while middlemen in Gulf and Asian ports collect the margin.
The political position in New Delhi remains firm. An Indian official said in October 2024 that “trade and terror don’t mix,” tying any normalisation to Pakistan curbing militancy. Until that changes, the trade will continue to run unofficially, at higher cost and through other countries.