India's big attack on Pakistan: Ban on all imports, will have a deep impact on the economy

New Delhi : India has imposed a complete ban on all types of direct and indirect imports from Pakistan with immediate effect. This tough step was taken in response to the terrorist attack in Pahalgam, Jammu and Kashmir on 22 April 2025, in which 26 people lost their lives. According to the Commerce Ministry's notification dated May 2, the Foreign Trade Policy (FTP) 2023 has been amended to ban the import and transit of all goods originating or exported from Pakistan. This decision is likely to have a deep impact on Pakistan's already weak economy, while its impact on India will be minimal. Let us analyze the facts and impact of this ban.

India's tough stand after Pahalgam attack

After the Pahalgam terror attack, which India termed as Pakistan-sponsored, India took several tough steps. These include suspending the Indus Water Treaty, closing the airspace, and now a complete ban on all imports and exports. The Commerce Ministry said the ban was in the interest of "national security and public policy". The Directorate General of Foreign Trade (DGFT) notification clarified that the ban will remain in effect until further orders, and any exemption will require special permission from the government.

Imports from Pakistan: What used to come before?

India-Pakistan trade had already become negligible after the 2019 Pulwama attack and the removal of Article 370. India's imports from Pakistan in FY 2024-25 (April-January) were a mere $0.42 million, which is less than 0.01% of India's total global trade. The main imported items were:

• Rock salt: Its prices have doubled in border areas like Amritsar.
• Multani mitti: Useful in the cosmetic industry.
• Agricultural products and spices: Dates, dried dates (99.3% of imports in 2018-19), and limited quantities of pepper, cardamom.
• Others: Cement, gypsum, and fruits (almost zero now).

These imports were mostly through third countries like Dubai or Singapore. Now this ban has blocked this route too.

Impact on Pakistan's economy

Pakistan's economy, which is already burdened by inflation, foreign exchange crisis, and debt, will be deeply affected by this ban:

1. Food security: Stopping supplies of sugar, oilseeds, dairy products, and spices (tea, coffee, pepper, cardamom) from India will lead to higher prices. Alternative sources (Sri Lanka, Vietnam) are expensive and less accessible, affecting the food processing and restaurant industries.
2. Pharma crisis: With the export of active pharmaceutical ingredients (APIs) and medicines from India being stopped, Pakistan will have to import from other countries (China, Europe) at higher prices. This will affect the availability of medicines for the lower and middle class.
3. Inflation and import bill: In the absence of cheap Indian products, the import bill will increase, further fuelling inflation.
4. Trade instability: With India's exports to Pakistan ($447.65 million) also being stopped, sectors such as cotton, chemicals, and motor parts will be affected.

Experts believe that Pakistan's GDP, which was registering a growth of less than 3% in 2024, will come under additional pressure. The food and drug crisis may also increase social instability.

Impact on India

The impact of this ban on India will be limited, as its trade with Pakistan is less than 0.06% of the total global trade.

• Alternate sources: India can rely on domestic production or other countries (Nepal, Sri Lanka) for rock salt and spices.
• Export markets: India's pharma and agricultural exports have large markets in Europe, Africa, and Southeast Asia.
• Border areas: Rock salt prices may increase in areas like Amritsar, but the national impact will be minimal.

Other moves and regional impact

India banned Pakistani ships from entering Indian ports and forbade Indian ships from entering Pakistani ports. Postal, parcel, and mail exchanges have also been restricted.

• Regional tensions: Pakistan responded by announcing the suspension of all bilateral agreements with India and a shutdown of trade through third countries.
• Support from the trade community: The Chamber of Trade and Industry (CTI) and Warehouse Traders Federation welcomed the move. CTI initiated a shutdown of trade with Pakistan from Kashmiri Gate market.

Experts' analysis

Experts believe that this ban is part of India's "zero tolerance against terrorism" policy. Professor Nikita Singla said, "Putting economic pressure on Pakistan is part of India's strategy, but its humanitarian impact, especially on the poor class of Pakistan, can be serious." On the other hand, some believe that India will have to find alternative routes (Iran, Afghanistan) for trade with Central Asia.