India has implemented its harshest economic sanctions against Pakistan to date in the wake of the deadly Pahalgam terror incident on April 22, 2025, including a complete prohibition on all imports and marine access.
With serious economic and humanitarian ramifications for Pakistan, this sharp rise in diplomatic tensions marks a turning point in India’s strategy against cross-border terrorism. In addition to drawing attention to the complicated geopolitical relationship between the two nuclear-armed neighbors, the blockade has raised concerns about crucial supplies in Pakistan, especially pharmaceuticals.
The extent of India’s trade prohibitions is strikingly extensive. In addition to direct imports from Pakistan, the embargo also forbids the passage of any commodities that originate in or are exported from Pakistan, even if they were previously allowed, as well as indirect imports through other nations. This complete ban is a major step forward from the 200% import tax that was put in place following the 2019 Pulwama assault, which had already significantly decreased direct trade between the two nations. Despite earlier prohibitions, the new steps guarantee that Pakistani commodities cannot reach India through any other routes or third-party countries that previously allowed commerce.
The import prohibition is just one aspect of India’s harsh response. To further isolate Pakistan diplomatically and economically, the government has imposed a number of supplementary restrictions. The interchange of all types of mail and packages with Pakistan through land and air channels has been halted by the Department of Posts. A government official connected the Pahalgam strike’s “cross-border linkages” to this suspension. Furthermore, the Directorate General of Shipping has issued a notice that forbids Indian ships from visiting Pakistani ports and, in turn, forbids any vessels flying the flag of Pakistan from landing at Indian ports. “Ensure safety of Indian assets, cargo and connected infrastructure, in public interest and for the interest of Indian shipping” was the stated goal of these shipping limitations.
These trade restrictions have a significant symbolic meaning, but it seems that they will have little real economic impact on India. Bilateral commerce was already rather low before to these new limitations; India’s exports to Pakistan in April–January 2024–25 totaled $447.65 million, while imports were a pitiful $0.42 million. Specialty goods including figs ($78,000), herbs like basil and rosemary ($18,856), certain chemicals, and Himalayan pink salt had been the main imports from Pakistan to India. Compared to pre-2019 levels, when India’s imports from Pakistan were $494.8 million and its exports to Pakistan were $2.06 billion, this indicates a sharp drop.
Compared to India, Pakistan seems to be far more susceptible to these trade interruptions. Prior to India’s pronouncements, Pakistan has already halted all imports from India in late April 2025 as a result of rising Indus Water Treaty concerns. Pakistan has taken a number of retaliatory actions in response to India’s extensive ban, such as barring Indian aircraft from using its airspace and dismissing Indian diplomats. Pakistan has most notably launched a surface-to-surface ballistic missile during training, which Pakistani military sources said had a 450-kilometer range. This military display raises the possibility of further escalation beyond economic measures, as does Pakistan’s assertion that it has “credible intelligence” that India may be considering military action.
The pharmaceutical industry in Pakistan is the most pressing humanitarian issue brought on by these trade restrictions. 30–40% of Pakistan’s pharmaceutical raw materials, such as Active Pharmaceutical Ingredients (APIs) and other innovative medicinal items, are reportedly sourced from India. To secure alternate pharmaceutical supply, the Drug Regulatory Authority of Pakistan (DRAP) has started “emergency preparedness” measures. Although DRAP officials pointed out that emergency preparations had started after the 2019 crisis, industry insiders and medical professionals have cautioned that if the supply disruption is not managed right away, serious problems could arise. In order to keep supply of vital medications, such as anti-rabies vaccines, anti-snake venom, cancer treatments, and other vital biological items, Pakistan is apparently looking for alternate suppliers from China, Russia, and European nations.
Although trade restrictions between the two countries have existed before, the current measures seem to be the most extensive to date. Prior limitations had already significantly curtailed direct trade, especially those put in place following the 2019 Pulwama assault. However, informal trade has persisted through third nations in spite of official limitations. The Global Trade Research Initiative (GTRI) estimates that Pakistan receives about $10 billion worth of Indian goods each year through indirect channels. Before being sent to Pakistan, these items are usually routed through ports in Dubai, Singapore, and Colombo, where they are relabeled to reflect different nations of origin. These indirect pathways are explicitly targeted by the existing limitations, which might potentially destroy this significant network of shadow trading.
In comparison to earlier economic measures enforced by India, the new set of limitations constitutes a dramatic increase. India levied a 200% customs tariff on goods from Pakistan after the 2019 Pulwama terror incident, thus stopping most direct trade. Nevertheless, postal and shipping connections as well as indirect imports were not specifically targeted by such regulations. The current restrictions are the most comprehensive economic action taken by India against Pakistan to date, targeting every potential trade route and communication channel. Although the import embargo is “mostly symbolic” given India’s low reliance on Pakistani goods, trade expert Ajay Srivastava pointed out that the comprehensive breadth of the restrictions might have a big effect on Pakistan’s economy, which still needs access to Indian goods.
There are important regional ramifications to the growing hostilities between these two nuclear-armed neighbors. The strongly fortified Line of Control, the de facto boundary, has apparently been the scene of cross-border shooting between both countries for nine nights in a row. According to the long-standing Indus Water Treaty, Pakistan has warned that any attempts to impede the flow of river water would be considered an act of war. This claim emphasizes how the ongoing trade dispute could develop into more extensive disputes over common resources. Given the past turbulence of India-Pakistan relations and their nuclear capabilities, the world community is probably going to keep a careful eye on these developments.
India’s most severe economic response to cross-border terrorism to date is the extensive trade ban and other restrictions it has put in place. Given the already low level of bilateral trade, the direct economic impact on India seems to be negligible, but the symbolic significance is significant. For Pakistan, the repercussions are more severe, notably involving pharmaceutical supplies and the potential disruption of the $10 billion informal trading network.
The actions demonstrate India’s readiness to employ economic pressure as a form of retaliation and its increasingly assertive posture on matters of national security. It is unclear if these limitations will result in additional regional instability or meet their stated security goals. With economic links now virtually severed and humanitarian issues becoming a possible focal point for world attention, it is evident that India-Pakistan relations have hit yet another low point.
