NEW DELHI: In a significant escalation of economic offensive in the wake of the Pahalgam attack, govt on Saturday moved to choke trade flows from Pakistan by imposing a blanket ban on all shipments – direct or routed through third countries, as well as mails and parcels from its hostile neighbour.
It also barred Pakistan-flagged ships from entering Indian ports and prohibited Indian vessels from docking in Pakistan, signalling a hardening stance amid deteriorating bilateral ties.
“This comprehensive ban, including indirect imports, will enable custom authorities to prevent Pakistani goods from entering India through circumvention,” an official told TOI. This is the second major non-military offensive after visa restrictions were announced.
If ban strictly imposed, business through third-party routes can be choked
While direct trade is relatively low, third-party trade is estimated to be in multiples of direct trade between the two countries. GovtтАЩs decision to impose 200% tariff on Pakistani imports and withdrawal of MFN (most favoured nation) status after the Pulwama attack has resulted in more consignments flowing through other countries as direct imports from Pakistan crashed from nearly $500 million in 2018-19 to $480,000 in 2023-24. Horticulture produce, cement, salt and cotton yarn were the most affected products, sources said.
Even before this, considerable amounts of goods were entering from Pakistan via third countries. After 2019, these flows increased, particularly through UAE and Sri Lanka, possibly by misusing trade agreements тАФ an issue that Indian authorities failed to adequately monitor.
A lot of Pakistani fruits, dry dates, leather and textiles are repackaged and relabelled in UAE, while chemicals and specialty products are routed through Singapore. Indonesia is said to be the transit route for cement, soda ash and raw materials used by the textiles sector. Similarly, dry fruits, salt and leather goods are reprocessed and routed through Sri Lanka using SAFTA benefits. If the ban is strictly imposed, the flow of goods through these routes can be choked but itтАЩs unclear how govt wants to tackle this. There is much higher flow of Indian goods to Pakistan, although some of it, is now tapering off.