Pakistan's Imports from India Rebound Amidst Lingering Tensions

Despite significant political strains, Pakistan's imports from India have shown a notable resurgence. This comes after a period in the spring of 2025 when most bilateral ties were severed following a deadly attack in India-administered Kashmir and subsequent retaliatory actions by both nations. The conflict, which involved missile and drone exchanges, concluded with a ceasefire on May 10, 2025, a development then-US President Donald Trump claimed credit for.

Recent data from the State Bank of Pakistan (SBP) indicates a gradual recovery in trade. From July to September of the current year, Pakistan imported goods valued at $61.7 million from India, marking a 69 percent increase compared to the same period in the previous year. While monthly payments for Indian imports had dropped significantly after the conflict, falling from $20 million in April 2025 to $9.2 million in June and $8.2 million in July, they rebounded to $19.6 million by September.

For the full fiscal year 2025-2026, Pakistan paid $203.8 million for Indian imports, a slight decrease of 7.6 percent from the prior year. However, monthly averages suggest a near-complete recovery, with payments averaging $19.3 million in the 12 months preceding the conflict and $19.1 million in the 13 months from September 2025.

Government trade data, which categorizes imports by commodity, places the value of imports in the latest quarter at $62.6 million. The primary imports from India continue to be organic chemicals and pharmaceutical products, constituting 96.2 percent of the total in 2025-2026, up from 93 percent the previous year. Notably, imports of vaccines, blood products, and similar items rose to $93.6 million from $70.3 million, with vaccines for human use seeing a significant jump to $32.3 million from $11.1 million.

Khaqan Najeeb, a former adviser to Pakistan’s Ministry of Finance, attributes this reliance on India's competitive pharmaceutical industry, particularly in active pharmaceutical ingredients (APIs). He stated, "Pakistan’s pharmaceutical industry has historically sourced some of these inputs from India because of competitive prices, product availability and geographical proximity."

Pakistan's trade restrictions on Indian goods predated the 2025 conflict. An import ban was imposed in August 2019, shortly after India revoked the special autonomous status of India-administered Kashmir. However, an exemption for therapeutic products regulated by the Drug Regulatory Authority of Pakistan (DRAP) was made less than a month later. Following the April 2025 attack and the suspension of the Indus Waters Treaty, further restrictions were imposed, suspending all trade with India. Despite these measures, some Indian goods reportedly enter Pakistan through third countries like Dubai and Malaysia, though their origin is still recorded.

Muhammad Zubair Motiwala, former chief executive of the Trade Development Authority of Pakistan (TDAP), noted that replacing Indian suppliers could substantially increase costs for Pakistani businesses, potentially by 40 to 50 percent. He expressed a desire for trade to reopen, stating, "Our raw material comes from them, and it comes from other places."

Despite the overall low percentage of India's share in Pakistan's total import bill (0.3 percent), its significance in the pharmaceutical sector is considerable. In 2024, India was Pakistan's second-largest supplier of pharmaceuticals. While Pakistan's trade decisions are ultimately guided by national interest, the economic implications of sourcing alternatives are significant.

Recent events suggest a potential easing of relations. Motiwala observed, "I do think the ice is melting. It seems like it." This includes the repatriation of Pakistani fishermen by India and a handshake between Indian and Pakistani footballers before and after a SAFF Championship match in Dhaka, a departure from previous practices of avoidance.

Najeeb suggested that while closer economic ties could benefit both nations, economic considerations must align with the political and security environment. He proposed that a gradual resumption of trade could be explored where conditions permit, starting with areas of clear economic and humanitarian benefit.