India-Pakistan Tensions Over Kashmir Severely Disrupt Trade, Pharma Supply, and Flight Routes

Fresh Conflict Disrupts Trade

Recent violence in Kashmir, where 26 people were killed by suspected militants, has reignited tensions between India and Pakistan. Both countries have taken strong steps in response. These actions are likely to worsen the already weak trade relationship between the two neighbors.

Bilateral Trade Has Declined Sharply

Trade between India and Pakistan has dropped significantly since 2019. That year, a suicide bombing in Kashmir killed 40 Indian paramilitary personnel. India responded with air strikes. Since then, diplomatic and trade ties have weakened.

In 2018, the total trade value was nearly $3 billion. By 2024, it had fallen to just $1.2 billion.

From April 2024 to January 2025, India exported around $500 million in goods to Pakistan. These included medicines, chemicals, sugar, and auto parts. During the same period, India imported only $0.42 million worth of goods from Pakistan.

Border Closures Escalate the Situation

India recently shut the Attari check post, an important land trade route. In return, Pakistan suspended all trade with India. This includes trade through third countries and goods in transit to other nations.

Pakistan also closed its airspace to Indian airlines. This move affects several international flight routes.

Pakistan’s Pharma Sector at Risk

Pakistan’s pharmaceutical industry depends on raw materials from India. The sudden stop in trade could hurt the availability of essential medicines. Ehsan Malik, CEO of the Pakistan Business Council, warned that this could create a serious shortage.

Trade via Third Countries May Suffer

Due to earlier restrictions, many goods now pass through third countries like the UAE and Singapore. But even this indirect trade route may be affected. Prices of common goods like tea, medicine, and fertilizers could increase.

Airlines Face Route Changes and Cost Increases

Indian carriers like Air India and IndiGo said the closure of Pakistani airspace would impact long-haul flights. Routes to the US and Europe will now be longer. This means higher fuel costs and extended travel times.

Afghanistan Trade Also Hit

India imports about $640 million worth of agricultural products from Afghanistan. These goods usually pass through Pakistan. The new restrictions will slow this supply chain. However, India’s exports to Afghanistan, which mainly move by sea, are expected to continue without much trouble.

Ajay Sahai, from the Federation of Indian Export Organisations (FIEO), said:
“Some exporters may face issues, but trading with a hostile country is not ideal right now.”

Conclusion

The fresh trade bans and airspace restrictions are likely to hurt both India and Pakistan. Key industries like pharmaceuticals, agriculture, and aviation could face serious setbacks.