Pakistan Halts All Trade with India After Delhi Drops the Hammer on Indus Treaty

Pakistan has officially suspended all trade with India, including goods transiting through third countries, in a sharp response to India’s recent move to hold the Indus Waters Treaty in abeyance. The decision, taken at a high-level National Security Committee (NSC) meeting chaired by Prime Minister Shehbaz Sharif, marks one of the most severe setbacks in economic relations between the two countries in recent years.

The NSC termed water a “vital national interest” and warned that any Indian attempt to block or divert water flows under the World Bank-brokered 1960 treaty would be considered an “act of war.” Pakistan emphasized that the treaty contains no clause for unilateral suspension.

 

In a series of strong retaliatory measures, Pakistan:

Closed the Wagah border for all movement from India,

Cancelled Indian visas under the SAARC Visa Exemption Scheme (except for Sikh pilgrims),

Declared Indian defence staff in Islamabad persona non grata, ordering them to leave by April 30

Shut its airspace to Indian-owned or operated airlines, and

Cut down India’s diplomatic presence in Islamabad to 30 personnel.

The decision effectively halts all trade and diplomatic connectivity between the two countries.

Read This Also: Pakistan Suspends 1972 Simla Agreement in Retaliation to India’s Indus Water Move

Trade Picture

Ironically, the move comes just as India-Pakistan trade had shown signs of recovery. The trade between India and Pakistan witnessed a jump of 127% in 2024 to hit $1.21 billion. The key Indian exports included pharmaceuticals, organic chemicals, and sugar. India has always maintained a trade surplus with Pakistan. According to the website of the High Commission of India in Islamabad, the export from India to Pakistan had gone up from $286.94 million in 2003-2004 to $2066.56 million in FY19. Similary, imports also rose sharply from $57.74 million in 2003-2004 to $494.87 million in FY19. 

India mainly exports cotton, organic chemicals, food products (including animal fodder), vegetables, plastics, man-made filament, coffee, tea, spices, dyes, oil seeds, dairy, and pharmaceuticals to Pakistan. In return, India imports copper, edible fruits and nuts, cotton, salt, sulphur, organic chemicals, mineral fuels, plastic products, wool, glassware, and raw hides & skins from Pakistan.

Relations took a further hit after the April 22 terror attack in Pahalgam, Jammu and Kashmir, where 26 civilians were killed. A group linked to Pakistan-based Lashkar-e-Taiba claimed responsibility. The attack triggered renewed outrage in India and was a key factor in Pakistan's latest diplomatic and trade offensive.