Pakistan shuts ports for Indian ships: What this means for both the sides

The Pahalgam terror attack that killed 26 people — mostly tourists — has triggered a sharp escalation in India-Pakistan tensions, culminating in a complete halt to maritime trade and postal exchanges. 

What began with India’s blanket ban on imports and Pakistani ships has now been mirrored by Pakistan’s order barring Indian vessels from its ports. The fallout is politically significant for both nations — but economically, it’s Pakistan that stands to lose more.

On Saturday, India announced a full trade ban on goods originating from or routed through Pakistan, banned Pakistani ships from entering Indian ports, and suspended all mail and parcel exchanges. 

In retaliation, Pakistan’s Ministry of Maritime Affairs prohibited Indian-flagged ships from docking at any of its ports and barred Pakistani ships from accessing Indian ports.

India’s economic exposure to Pakistan has been negligible since 2019, when it imposed a 200% import duty following the Pulwama attack. Trade has been largely symbolic since then. The new measures tighten the noose by sealing transshipment loopholes and removing any residual maritime or postal routes.

“The move is largely symbolic,” said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI). “India had already imposed 200% tariffs after the 2019 Pulwama attack, which effectively reduced imports from Pakistan to just $0.42 million between April 2024 and January 2025. These were niche items like figs, Himalayan pink salt, and select herbs such as basil and rosemary. India doesn’t depend on Pakistani goods, so the economic impact is minimal. On the other hand, Pakistan still needs Indian products and may continue accessing them through third countries using recoded or unrecorded routes.”

For Pakistan, the damage is more tangible. While overall trade with India had dwindled, sectors like cement, textiles, and some agricultural goods still relied on informal or third-country routes to reach Indian buyers. 

These have now been completely cut off. The port ban also hits Pakistan’s struggling shipping and logistics sector, and limits access to Indian-origin intermediaries and products used in manufacturing and exports.

Moreover, Pakistan’s inability to maintain even limited bilateral commerce with a large neighbour like India further isolates it in an already fragile economic scenario. It loses a potentially large consumer market and cements its image as a high-risk trade partner.

Bilateral trade between India and Pakistan has seen a sharp decline over the past five years, with official data showing a 56.91% drop in India’s exports to Pakistan between April 2024 and February 2025 — down to just $491 million.

During the same period, India reported no imports from Pakistan. In contrast, India’s total merchandise exports for FY25 stood at $437.42 billion, underlining how negligible Pakistan’s role has become in India's trade landscape. Key Indian exports to Pakistan in FY25 included drug formulations, bulk drugs, sugar, residual chemicals, and auto components.

India’s exports to Pakistan had once peaked at $2.06 billion in FY19, while imports stood at $495 million. By FY24, exports recovered to $1.18 billion, but imports shrank to just $3 million — mainly comprising Ayurvedic and herbal preparations, spices, and fresh fruits.

Experts say while direct trade has nearly vanished, indirect trade via third countries, especially in the Middle East, continues. The Indian government is now reportedly evaluating ways to curb even this routed commerce. According to Ajay Sahai, Director General and CEO of FIEO, while Indian pharma and chemicals are critical for Pakistan, they make up only 0.06% of India’s total foreign trade.