At least $500 million worth of Pakistani items are still being repackaged and relabelled in a third country to access the Indian market.
In the wake of the ban on Pakistani merchandise imports, the customs department is on high alert to thwart Islamabad’s attempts to access the Indian market through a third country, such as the United Arab Emirates (UAE), Singapore, Indonesia, or Sri Lanka, people in the know said on Sunday.
At least $500 million worth of Pakistani fruits, dry dates, textiles, soda ash, rock salt, and leather items are still being repackaged and relabelled in a third country to access the Indian market, the people said, requesting anonymity because they are not authorised to speak on the matter.
To be sure, Indian imports from Pakistan through the official channel are negligible, but Pakistani items come in via third countries. Hence, the government on May 2 issued an order banning all direct and indirect imports from Pakistan.
“The idea is to choke Pakistani exports as Pakistan’s economy is already crippled and vulnerable,” one of the people said.
The first major blow to Pakistan’s economy was dealt when India withdrew its most favoured nation (MFN) status after the Pulwama terror attack in February 2019, citing “incontrovertible evidence” showing the neighbouring country’s direct involvement in the act of terrorism that killed CRPF jawans.
Besides withdrawing the MFN status, New Delhi imposed a 200% customs duty on imports from Pakistan, leading to a sharp fall in shipments from across the border. Pakistani imports that were worth $2.39 million in 2020-21, gradually fell to almost negligible ($0.42 million) in the first 10 months of 2024-25, said an official.
“The 200% tariff effectively halted direct imports from Pakistan by making them commercially unviable, and within a year, Pakistan’s exports to India fell by over 90%. Key sectors such as horticulture, cement, salt, and cotton yarn were the most affected,” he said, adding that “terror and trade” can’t happen together.
The Directorate General of Foreign Trade (DGFT) on Friday evening issued a notification prohibiting all Pakistani imports, either directly or through a third country and government agencies have been asked to keep a strict vigil, a second person said. “The order was necessary to arm field formations of customs and other agencies to act on Pakistani products coming through friendlier countries,” he said.
“This restriction is imposed in the interest of national security and public policy. Any exception to this prohibition shall require prior approval of the Government of India,” the order said. DGFT is an arm of the ministry of commerce and industry. The development is part of New Delhi’s ongoing reaction to the Pakistan-sponsored terror attack on tourists in Pahalgam on April 22 that killed 26 people.
According to government data, Pakistan imported goods worth $448 million from India in April-January of FY25. Its imports included essential medicines, sugar, chemicals, auto components and petroleum products.
In the 2023-24 financial year, India imported some goods, particularly agricultural commodities, worth $3 million only from Pakistan. At the same time, Pakistan imported Indian goods worth $1.2 billion in FY24, according to official data.
Indo-Pak bilateral merchandise trade fell sharply after 2018-19. In FY19, India exported goods worth $2.07 billion to Pakistan and imported Pakistani merchandise worth $495 million. In the following financial year, Indian exports to Pakistan fell by 60.5% to $817 million, and Pakistani exports to India plunged by 97.2% to $14 million.
India used to import mineral oil, copper, edible fruits and nuts, salt, sulphur, plastering materials, cotton, raw hides and skins. It exported cotton, chemicals, prepared animal fodder, vegetables, plastic articles, dairy products, pharmaceuticals and sugar to Pakistan.
