Despite Tensions, India-Pakistan Trade Thrives Through Third Countries

Despite a recent military skirmish and ongoing border closures, trade between Pakistan and India persisted in May, largely facilitated through third countries. Official data reveals that imports from India hit a three-year high during the July-May FY25 period, according to figures from the State Bank of Pakistan (SBP). Imports totaled USD 211.5 million in FY25, surpassing the USD 207 million mark of FY24 and the USD 190 million in FY23.

In May, against the backdrop of a four-day conflict, imports stood at USD 15 million, a slight dip from the USD 17 million recorded in the same month last year. Conversely, Pakistan's exports to India were minimal—just USD 1,000 in May, with a mere USD 0.5 million spread over July-May FY25.

The trade relationship has remained largely one-sided, exacerbated by India's response to the April 22 Pahalgam terror attack, which included shutting down key trade routes. This has fueled unofficial trade through Dubai, Colombo, and Singapore, estimated at USD 10 billion annually, underscoring the robust demand in Pakistan despite high local production costs.