NEW DELHI: Indian merchandise worth more than $10 billion annually is reportedly reaching Pakistan through alternative trade channels, bypassing existing trade restrictions, according to trade data from the Global Trade Research Initiative (GTRI).
GTRI revealed that businesses are increasingly using intermediary ports in Dubai, Singapore, and Colombo to transport goods from India to Pakistan. These ports serve as key transshipment points, enabling goods to reach their final destination despite trade limitations between the two nations. “GTRI estimates that Indian goods worth over $10 billion annually reach Pakistan via this route,” the report stated, as quoted by ANI.
The process involves Indian companies transporting goods to these intermediary ports, where independent entities unload and store the items in bonded warehouses. These warehouses, which operate as duty-free storage facilities for goods in transit, play a crucial role in this process. “In these bonded warehouses, labels and documents are often altered to show a different country of origin. For example, Indian-made goods may be relabelled as ‘Made in UAE.’ Once this change is made, the goods are shipped to Pakistan, where direct trade with India is not permitted,” the report added.
This strategy allows businesses to circumvent India-Pakistan trade restrictions, obtain higher prices through third-country routing, and avoid detection, as transactions appear to originate from alternative nations.
The GTRI emphasized that while this transshipment model is not always illegal, it operates in a grey area, claiming how businesses are finding ways to maintain trade, often staying ahead of government regulations.
The recent terrorist attack in Pahalgam, which claimed 26 lives, led to a series of diplomatic actions by India, including shutting down the Integrated Check Post at Attari, canceling the SAARC Visa Exemption Scheme for Pakistani nationals with just 40 hours’ notice, and reducing diplomatic staff at both countries’ high commissions.
These rising diplomatic tensions are expected to have a significant impact on commercial exchanges between India and Pakistan. Additionally, in the wake of the attack, India has suspended the 1960 Indus Waters Treaty, further straining bilateral relations.