Will Pakistan's suspension of trade ties hurt India?

In a bold step, Pakistan today decided to suspend trade relations and downgrade diplomatic relations with India. This move can be seen as a direct fallout of Modi government's decision to remove all special provisions relating to Kashmir and bifurcate the state into two Union Territories.

On a deeper analysis, it appears that Pakistan's decision to temporarily suspend trade ties will not have much impact on both the nations. Trade between both nations had stood at just $2.4 billion in 2017-18, accounting for a mere 0.31 per cent of India’s total trade with the world and just about 3.2 per cent of Pakistan’s global trade.

Pakistan currently exports , cement ($78.3 million), fertilisers ($34.9 million), fruits ($112.8 million per year), chemicals ($60.4 million) and leather and allied products to India. However, a larger look at trade activities between India and Pakistan reveals that import and export between India and Pakistan has been declining since 2014-15.


The government of India had suspended cross-LoC trade in April 2019, on receiving reports that cross-LoC trade routes were being misused by Pakistan-based elements for funnelling illegal weapons, narcotics and fake currency.

After the Pulwama attack, not only has India tried to stifle Pakistan by courting global support to declare it a terror monger, but the Modi government has also made efforts to cripple its economy by increasing duties on essential products.

The main items India imports are fresh fruits, cement, petroleum products, bulk minerals and ores and finished leather. The major exports to Pakistan include raw cotton, cotton yarn, chemicals, plastics, manmade yarn and dyes.