Islamabad, July 5 – Despite heightened tensions and a brief military standoff in May, trade between India and Pakistan quietly continued largely through third countries underscoring the resilience of economic links even amidst political hostility.
According to State Bank of Pakistan (SBP) data cited by Dawn, imports from India reached a three-year high of USD 211.5 million during the first 11 months of fiscal year 2025, outpacing USD 207 million in FY24 and USD 190 million in FY23.
In May alone during which a four-day cross-border conflict unfolded Pakistan imported goods worth USD 15 million from India, only a slight dip from USD 17 million recorded in May 2024.
However, Pakistan’s exports to India remained almost non-existent, standing at a mere USD 1,000 in May and USD 0.5 million for the entire July–May period. In comparison, exports in FY24 were USD 3.44 million.
Formal bilateral trade has remained restricted since 2019, and the April 2025 Pahalgam terror attack, which led to the death of 26 Indian soldiers, prompted India to swiftly close the Attari land transit point, further choking direct trade links.
In response, Pakistan declared a full halt to any form of trade with India, including transactions routed via third countries. Yet, official import figures defy this stance, suggesting pre-existing contracts or alternative channels remained operational.
Industry insiders offered guarded comments, but some suggested the goods were likely rerouted through hubs such as Dubai or Singapore, with payments processed before the May conflict. One trader speculated that “third-country trade remained intact, and settlement was likely handled prior to hostilities.”
Research institutions suggest unofficial trade could be as high as USD 10 billion annually, facilitated through third-party nations and unregulated routes. Analysts note that Pakistan’s high production costs and dependency on Indian inputs make complete trade isolation unrealistic.
“Smuggling and indirect trade are thriving because local industries can’t compete without affordable inputs,” said a Pakistani exporter, hinting that ground realities continue to defy official posturing.
India-Pakistan Trade Endures Through Third-Party Channels Despite Conflict
