India has tightened its economic clampdown on Pakistan by enforcing a complete ban on all imports and transits of goods originating from or exported via Pakistan. This stringent measure comes in the aftermath of the Pahalgam terror attack in South Kashmir, which claimed at least 26 lives and injured many others, most of whom were tourists.

The Commerce Ministry’s latest directive, issued through the Directorate General of Foreign Trade (DGFT), is aimed at closing all remaining loopholes that allowed Pakistani goods to enter Indian markets indirectly through intermediary countries.

What Does the New Ban Entail?

According to the DGFT’s notification:
“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.”

This means no Pakistani products—whether shipped directly or routed through third-party countries like the UAE or Singapore—can enter Indian territory without prior Government of India approval. This move is anchored in national security and public policy.

Indirect Entry of Pakistani Goods: A Loophole Now Shut

Despite earlier trade restrictions such as the closure of the Wagah-Attari border, experts had pointed out that Pakistani goods worth over $500 million were still entering Indian markets through transhipment hubs. These goods were often repackaged and relabelled to conceal their origin.

Countries acting as repackaging or transit points include:

• UAE: For Pakistani fruits, dates, leather, and textiles

• Singapore: For chemical exports

• Indonesia: As a route for cement, soda ash, and textile raw materials

• Sri Lanka: For dry fruits, salt, and leather goods

These repackaged goods often escaped detection due to manipulated country-of-origin documentation.

Commerce Ministry’s Rationale Behind the Ban

A senior Commerce Ministry official, quoted by PTI, emphasized the strategic necessity of a total ban on Pakistani goods. With evidence that many of the $500 million in Pakistani exports were entering India indirectly, stringent action was deemed essential.

The ban will empower customs authorities to stop and seize shipments that use repackaging and false origin routes. The official described this move as a critical step to prevent circumvention of India's national trade policies and ensure effective border control.

Trade Relations: A Rapid Downward Spiral Since Pulwama

Trade between India and Pakistan has been on a sharp decline since the 2019 Pulwama terror attack, where 40 CRPF personnel were martyred. Following that:

• India revoked Pakistan’s ‘most favoured nation’ status

• Imposed 200% import duties on goods like cement, petroleum, fruits, and mineral ore

• Enforced several diplomatic and economic restrictions

According to data from the Commerce Ministry:

• Between April 2024 and January 2025, India imported only $420,000 worth of goods from Pakistan

• This is a sharp fall from $2.86 million during the same period a year earlier

The latest directive is the most decisive economic measure yet against Pakistan since Pulwama.

Impact on Trade and Intermediary Routes

The new ban will have significant implications not just for Pakistan, but also for trading partners who re-export Pakistani goods.

• UAE’s role as a re-export hub may come under pressure

• Singapore and Indonesia, often used for shipping chemicals and cement, will face scrutiny

• Indian customs authorities are now tasked with intensive checks on all imports for signs of origin fraud

This may also disrupt Indian importers who relied on cheaper Pakistani raw materials via alternate routes.

India’s Response: A Broader Diplomatic and Economic Offensive

The ban follows a series of hardline decisions by New Delhi in the wake of the Pahalgam terror attack, which India has blamed on Pakistan-based terror groups. Measures taken so far include:

• Suspension of the Indus Waters Treaty

• Shutdown of the Integrated Check Post at Attari

• Slashing of diplomatic staff in both countries

• Revocation of all Pakistani visas

• Closure of Indian airspace to Pakistani carriers

• Ban on Indian-flagged vessels docking at Pakistani ports, prompting reciprocal action by Pakistan

These developments reflect a significant escalation in the Indo-Pakistani standoff and signal that de-escalation in the near term appears unlikely.

What This Means for Indian Businesses

Importers of dry fruits, cement, chemicals, and leather products from the UAE, Sri Lanka, and Singapore will need to carefully review their supply chains. Certificates of origin will be under greater scrutiny, and violations could result in seizures or penalties.

Additionally:

• Businesses will need to seek alternative sources from other nations

• Smaller traders, who depend on low-cost Pakistani goods, may suffer

• Logistics companies may face delays due to increased customs vigilance

What Lies Ahead?

With diplomatic relations between the two nations deteriorating further, full-scale trade normalisation seems distant. Analysts suggest that India’s move is aimed not just at security, but also at putting economic pressure on Pakistan at a time when it is already grappling with internal financial turmoil.

The Indian government is expected to coordinate closely with customs, intelligence, and trade bodies to enforce the ban and monitor for any attempted breaches or circumvention tactics.

Conclusion

The total ban on Pakistani imports and transits, both direct and indirect, marks a watershed moment in India’s foreign trade policy. Triggered by national security concerns following the Pahalgam terror attack, this move sends a clear diplomatic signal to Pakistan while aiming to cut off all economic ties that may indirectly benefit hostile elements.

As both nations navigate one of their most hostile diplomatic phases in recent years, the ban will be a litmus test of enforcement, cross-border intelligence coordination, and economic resilience on both sides.

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