May 2, 2025 – Dhaka, Bangladesh
Despite official restrictions, trade between India and Pakistan continues through indirect channels, with estimates suggesting that goods worth $10 billion are exchanged annually. While formal trade has dwindled since 2019, businesses have adapted by rerouting shipments through third countries such as Dubai, Singapore, and Colombo.
According to the Global Trade Research Initiative (GTRI), Indian goods are first shipped to intermediary hubs, where they are stored in bonded warehouses. Documents and labels are then altered to reflect a different country of origin before being re-exported to Pakistan. This method allows businesses to bypass trade restrictions while maintaining commercial ties.
Official trade figures paint a different picture. Between April 2024 and January 2025, India’s exports to Pakistan stood at $447.7 million, while Pakistan’s exports totaled just $420,000. However, experts argue that the actual volume of trade is significantly higher due to these backchannel routes.
The fragile trade relationship between the two nations has been further strained by recent diplomatic tensions following the April 22 terror attack in Pahalgam, which resulted in 26 casualties. In response, India withdrew from the Indus Water Treaty, while Pakistan imposed a blanket suspension on trade, including transactions via third countries.
With formal trade routes such as the Wagah-Attari border crossing remaining closed, businesses continue to rely on indirect methods to sustain commerce. While this transshipment model operates in a legal grey zone, it highlights the resilience of trade networks despite political challenges.
