India Bans Direct, Indirect Imports from Pakistan with Immediate Effect

India has banned direct or indirect import of all goods from Pakistan with immediate effect in the interest of national security and public policy, following the Pahalgam terror attack last month which killed 26 tourists, according to a government order.

The decision will completely halt all inbound shipments of goods from Pakistan to India. India's exports to Pakistan in April-January 2024-25 stood at $ 447.65 million, while imports were meagre $ 0.42 million.

A provision in this regard has been added in Foreign Trade Policy (FTP) 2023 "to prohibit direct or indirect import or transit of all goods originating in or exported from Pakistan with immediate effect until further orders", the Directorate General of Foreign Trade (DGFT) said in a notification dated May 2.

It added this restriction is imposed in the interest of national security and public policy. Any exception to this prohibition will require approval of Government of India, the order said.

Inserting the provision under the heading "Prohibition on Import from Pakistan" in the FTP, it said: "Direct or indirect import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, shall be prohibited with immediate effect, until further orders".

Main imports from the neighbouring country during April-January 2024-25 included fruits and nuts ($ 0.08 million), certain oil seeds and medicinal plants ($ 0.26 million), and organic chemicals.

The decision follows a terror attack in Pahalgam on April 22, in which 26 people were killed.

Following the terror attack, India took a series of measures including immediate shutting down of the Attari land-transit post, used for movement of certain kinds of goods. Besides, India has announced expulsion of Pakistani military attaches, and suspension of the Indus Water Treaty of 1960.

Due to this, the trade between India and Pakistan has already come to a complete halt. The two-way trade between the countries was miniscule following steps taken by both sides after the Pulwama terror attack in 2019.

In retaliation, Pakistan has also announced suspension of all trade with India, including to and from any third country through Pakistan.

Exports and imports in 2023-24 were $ 1.18 billion and $ 2.88 million, respectively.

In 2022-23 and 2021-22, India exported goods worth $ 627.1 million and $ 513.82 million, and imported products worth $ 20.11 million and $ 2.54 million, respectively.

In April-January 2024-25, exports of organic chemicals and pharmaceutical products accounted for about 60 per cent of the country's total outbound shipments to Pakistan. It was $ 129.55 million and $ 110.06 million, respectively.

The other items include sugar and sugar confectionary ($ 85.16 million), certain vegetables ($ 3.77 million), coffee, tea and spices ($ 1.66 million), cereals ($ 1.39 million), petroleum products ($ 11.63 million), fertiliser (USD 6 million), plastics ($ 4.16 million), rubber ($ 1.88 million), and auto components ($ 28.57 million).

The India-Pakistan trade relations soured after the Pulwama terror attack.

Following that, India raised the import duty to 200 per cent on all goods imported from the neighbouring country, including on fresh fruits, cement, petroleum products and mineral ore.

In 2017-18, Pakistan's exports to India were $ 488.5 million. India also withdrew MFN (most favoured nation) status to Pakistan.

That time the two main items imported from Pakistan were fruits and cement. Slapping an import duty of 200 per cent effectively means almost banning imports.

The country invoked a security exception clause of the World Trade Organization (WTO) to withdraw the MFN status. Both countries are members of this organisation.

India had granted the MFN status to Pakistan way back in 1996, but the neighbouring country had not reciprocated.

Under the MFN pact, a WTO member country is obliged to treat the other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

In 2012, Pakistan had committed to giving the MFN status to India but retracted later due to domestic opposition. Instead of MFN, Pakistan said it was working on granting Non- Discriminatory Market Access (NDMA) status to India but that also was not announced.

Pakistan too in August 2019 suspended trade ties with New Delhi following imposition of the heavy import duty by India on imports from Pakistan.

Both countries have a long history of strained relations, primarily due to the Kashmir issue as well as the cross-border terrorism emanating from Pakistan.

Total India-Pakistan trade in 2017-18 was $ 2.41 billion as against $ 2.27 billion in 2016-17. India imported goods worth $ 488.5 million in 2017-18 and exported goods worth $ 1.92 billion.