The Pak-India Business Council estimates a $40 billion economic loss since 2019 due to the trade freeze with India. Despite the official ban, recent data shows trade persists through indirect channels, with imports from India reaching $61.74 million in the first quarter of fiscal year 2026-27.
The Pak-India Business Council has estimated that the Pakistani economy has incurred a cumulative loss of $40 billion since the suspension of trade with India in 2019. This reported loss stems primarily from the additional costs involved in sourcing essential commodities from distant global markets instead of utilizing shorter, more cost-effective regional supply chains.
While the official ban remains in place, recent data from the State Bank of Pakistan highlights the economic reality of the situation. Imports from India were recorded at $61.74 million during the first quarter of the 2026-27 fiscal year. This marks a 68.9% increase compared to the previous year, indicating that goods are still flowing across borders, though through indirect routes such as Dubai, Singapore, and Colombo. This workaround adds significant logistical premiums, which industry leaders argue has inflated prices for domestic businesses.
Industrial sectors such as textiles and pharmaceuticals are reportedly facing the most immediate impact. Textile manufacturers, dealing with lower domestic cotton yields, have had to procure raw materials from countries like Brazil and Egypt. Similarly, the pharmaceutical sector has struggled to source affordable raw materials that were previously available through direct imports from India. Industry representatives suggest that bypassing these direct channels has increased costs for manufacturers while limiting the competitive edge of these goods.
From a macroeconomic perspective, the trade situation is occurring against a backdrop of wider financial stress. Pakistan’s total trade deficit for the fiscal year 2026 reached $39.5 billion. The necessity of using long-haul shipping for key imports like sugar, fertilizer, and petroleum has put continued pressure on foreign exchange reserves. High shipping costs and inefficient supply chain logistics have contributed to inflationary pressures, which remain a primary concern for the domestic business community.
Looking ahead, the central economic challenge for Pakistan remains the structural weakness of its trade balance and the ongoing impact of high logistics costs. While some industry groups are lobbying for a restoration of direct trade to stabilize commodity prices and reduce logistical expenses, political and diplomatic policies remain unchanged. Investors and analysts monitoring the region will likely watch for any official shifts in trade policy or further trends in indirect import volumes, as these factors continue to influence the country's manufacturing costs and general trade deficit figures.