India-Pakistan Trade Halt: Geopolitical Tensions and Economic Ripples

Following the Pahalgam terror attack, India has officially ceased all remaining formal trade ties with Pakistan, marking a significant escalation in geopolitical tensions. The decision has disrupted supply chains, particularly for Pakistan, which relies heavily on Indian goods such as pharmaceuticals, chemicals, and auto parts. According to the Global Trade Research Initiative (GTRI), Pakistan is expected to source Indian goods indirectly through third-party countries like the UAE and Singapore, albeit at higher costs. This trade halt underscores the fragile nature of bilateral relations, which have been deteriorating since India revoked Pakistan’s Most Favoured Nation status in 2019. While formal trade has ceased, unofficial routes continue to facilitate demand, reflecting the complexities of economic interdependence amidst political discord. The move is anticipated to exacerbate Pakistan’s economic challenges, including rising prices and strained supply chains, as flagged by global institutions like the IMF and World Bank. Stay informed about the broader implications of this trade suspension on regional stability and economic dynamics.