India-Pakistan bilateral trade restrictions (2019-present)

The India-Pakistan bilateral trade restrictions introduced in 2019 were reciprocal but distinct measures adopted during successive political crises. India withdrew Pakistan's most-favoured-nation treatment after the Pulwama attack and imposed a 200 per cent customs duty on goods originating in or exported from Pakistan. Pakistan suspended bilateral trade after India changed the constitutional status of Jammu and Kashmir in August 2019. Both states tightened the regime after the April 2025 Pahalgam attack. Formal trade fell sharply, although exceptions, indirect trade and third-country routing prevented complete economic separation.

Indian measures

On 15 February 2019, India withdrew the most-favoured-nation status it had extended to Pakistan. The next day, Customs Notification No. 5/2019 imposed a 200 per cent duty on goods originating in or exported from Pakistan. India separately suspended trade across the Line of Control in April, citing misuse of the mechanism. Line of Control trade was a distinct arrangement and should not be merged with customs treatment of ordinary international trade.

The tariff was punitive but not a legal prohibition. Its practical effect was to make most covered formal imports commercially unviable. The stated context was security and the Pulwama attack. Claims about a broader compellence objective require a defined demand.

Pakistani measures and exceptions

In August 2019, Pakistan suspended bilateral trade in response to India's actions in Jammu and Kashmir. The Ministry of Commerce implemented the decision through statutory regulatory orders and later created or adjusted exceptions, including for certain medicines and therapeutic products.

The legal schedule matters because trade suspension did not mean that every product and route remained prohibited without change. Pakistan-origin and India-origin restrictions, transit, personal baggage and third-country goods also require separate treatment.

2025 escalation

On 2 May 2025, India's Directorate General of Foreign Trade prohibited the direct or indirect import or transit of all goods originating in or exported from Pakistan, until further orders. This replaced the 200 per cent tariff with a prohibition and expressly reached third-country routing. Indian enforcement records later described seizures of Pakistan-origin goods transhipped through Dubai.

Pakistan's SRO 750(I)/2025, issued on 4 May, extended its own restrictions to specified third-country goods transiting Pakistan to or from India. These 2025 instruments were legally different from the 2019 measures and must remain separate in any chronology. As at 29 July 2026, the official schedules still listed them as operative.

Effects and assessment

Official bilateral trade contracted steeply. Current figures must state the fiscal year, direction and product coverage. Trade through the United Arab Emirates, Singapore or other hubs may include re-exports, but mirror-data differences are not proof that all such commerce circumvented the restrictions.

This is a main-sequence case of reciprocal trade denial and signalling. Both states accepted economic cost to communicate political resolve. Neither side identified and achieved a clear, measurable act of compellence through trade pressure alone.

The case illustrates the difference between formal rupture and commercial substitution. Bilateral statistics can approach zero while consumers and firms retain indirect access at higher cost. Current legal exceptions and data require a publication-day check.

See also

Trade sanctions · Trade-agreement suspension or abrogation · Third-country intermediary routing · Sanctions as signalling · Market-access coercion

Sources

1. Government of India, Central Board of Indirect Taxes and Customs, 'Notification No. 5/2019-Customs', 16 February 2019.
2. Government of India, Ministry of Commerce and Industry, 'Withdrawal of MFN Status to Pakistan', 15 February 2019.
3. Government of India, Ministry of Home Affairs, 'Suspension of Line of Control trade', 18 April 2019.
4. Government of Pakistan, Ministry of Commerce, 'SRO 927(I)/2019', August 2019.
5. Government of India, Department of Commerce, TradeStat, bilateral merchandise data.
6. World Bank, A Glass Half Full: The Promise of Regional Trade in South Asia (2018).
7. Government of India, Directorate General of Foreign Trade, 'Prohibition on direct or indirect import or transit of Pakistan-origin goods', Notification No. 06/2025-26, 2 May 2025.
8. Government of Pakistan, Ministry of Commerce, 'SRO 750(I)/2025', 4 May 2025.