India bans direct, indirect imports from Pakistan over Pahalgam attack
Following the terror attack, India took a series of measures including immediate shutting down of the Attari land-transit post, used for movement of certain kinds of goods
India has banned direct or indirect import of all goods from Pakistan with immediate effect in the interest of national security and public policy, following the Pahalgam terror attack last month which killed 26 tourists, according to a government order.
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The decision will completely halt all inbound shipments of goods from Pakistan to India. India's exports to Pakistan in April-January 2024-25 stood at USD 447.65 million, while imports were meagre USD 0.42 million.
DGFT notification
A provision in this regard has been added in Foreign Trade Policy (FTP) 2023 "to prohibit direct or indirect import or transit of all goods originating in or exported from Pakistan with immediate effect until further orders", the Directorate General of Foreign Trade (DGFT) said in a notification dated May 2.
It added this restriction is imposed in the interest of national security and public policy. Any exception to this prohibition will require approval of Government of India, the order said.
Inserting the provision under the heading "Prohibition on Import from Pakistan" in the FTP, it said: "Direct or indirect import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, shall be prohibited with immediate effect, until further orders".
Trade comes to halt
Main imports from the neighbouring country during April-January 2024-25 included fruits and nuts (USD 0.08 million), certain oil seeds and medicinal plants (USD 0.26 million), and organic chemicals.
The decision follows a terror attack in Pahalgam on April 22, in which 26 people were killed.
Following the terror attack, India took a series of measures including immediate shutting down of the Attari land-transit post, used for movement of certain kinds of goods. Besides, India has announced expulsion of Pakistani military attaches, and suspension of the Indus Water Treaty of 1960.
Due to this, the trade between India and Pakistan has already come to a complete halt. The two-way trade between the countries was miniscule following steps taken by both sides after the Pulwama terror attack in 2019.
Pak’s counter-measures
In retaliation, Pakistan has also announced suspension of all trade with India, including to and from any third country through Pakistan.
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Exports and imports in 2023-24 were USD 1.18 billion and USD 2.88 million, respectively.
In 2022-23 and 2021-22, India exported goods worth USD 627.1 million and USD 513.82 million, and imported products worth USD 20.11 million and USD 2.54 million, respectively.
In April-January 2024-25, exports of organic chemicals and pharmaceutical products accounted for about 60 per cent of the country's total outbound shipments to Pakistan. It was USD 129.55 million and USD 110.06 million, respectively.
The other items include sugar and sugar confectionary (USD 85.16 million), certain vegetables (USD 3.77 million), coffee, tea and spices (USD 1.66 million), cereals (USD 1.39 million), petroleum products (USD 11.63 million), fertiliser (USD 6 million), plastics (USD 4.16 million), rubber (USD 1.88 million), and auto components (USD 28.57 million).
Deteriorating ties
The India-Pakistan trade relations soured after the Pulwama terror attack.
Following that, India raised the import duty to 200 per cent on all goods imported from the neighbouring country, including on fresh fruits, cement, petroleum products and mineral ore.
In 2017-18, Pakistan's exports to India were USD 488.5 million. India also withdrew MFN (most favoured nation) status to Pakistan.
That time the two main items imported from Pakistan were fruits and cement. Slapping an import duty of 200 per cent effectively means almost banning imports.
MFN status
The country invoked a security exception clause of the World Trade Organization (WTO) to withdraw the MFN status. Both countries are members of this organisation.
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India had granted the MFN status to Pakistan way back in 1996, but the neighbouring country had not reciprocated.
Total India-Pakistan trade in 2017-18 was USD 2.41 billion as against USD 2.27 billion in 2016-17. India imported goods worth USD 488.5 million in 2017-18 and exported goods worth USD 1.92 billion.
(With agency inputs)