Attari Is Shut But Business Still Open: How India-Pakistan Trade Can Continue 'Quietly'

As diplomatic tension between India and Pakistan rises following the Pahalgam terror attack on April 22, there is a possibility that the neighbouring country is likely to source Indian goods at a higher cost indirectly.

India closed the Integrated Check Post (ICP) at Attari with immediate effect on Wednesday. This is the only land route currently open for trade between India and Pakistan. New Delhi-based think tank the Global Trade Research Initiative (GTRI) said that this border closure can halt only formal trade, not demand.

"India-Pakistan trade is officially frozen, functionally alive," said GTRI founder Ajay Srivastava in a social media post.

"Despite headlines of a complete trade shutdown, India-Pakistan commerce is far from dead—it may simply go underground," he added.

Srivastava also highlighted that trade restrictions often breed workaround ecosystems or informal channels. For businesses, this gets translated into extra costs and longer routes.

Explaining the trade relation between both neighbouring countries, GTRI stated that in FY24, between April and January, India exported $447.7mn worth of goods to Pakistan, which were mostly on humanitarian grounds. But that is just the formal side of things.

"An estimated $10bn in trade survives informally, routed via third countries like the UAE and Singapore. Pakistani buyers continue to import Indian goods—chemicals, cotton, tea, onions, auto parts—through intermediaries. India likely receives Pakistani dry fruits and Himalayan salt the same way," the GTRI founder said.

This isn’t the first time trade ties have taken a hit. Following the Pulwama Terror Attack in February 2019, India hiked duties on Pakistani goods to 200% and removed its most favoured nation (MFN) status. As a result, Pakistan’s exports to India plunged from $547.47mn in 2019 to just $0.48mn by 2024.

Pakistan's Response

Less than a day after New Delhi's action against cross-border terrorism, Islamabad also hits back with punitive measures including the expulsion of Indian diplomats from Islamabad, closure of its airspace to Indian-owned and Indian-operated airlines, and the suspension of the limited trade between the nations.

During an interview with British news channel Sky News on Friday, Pakistani defence minister Khawaja Asif indirectly admitted that Pakistan has been ‘supporting and funding’ terrorism for three decades.

“Well, we have been doing this dirty work for the United States for about three decades, and West, including Britain,” he said. Asif also admitted that it was a mistake and the country suffers for the same.