Indian goods worth over USD 10 billion are reaching Pakistan every year indirectly through ports such as Dubai, Singapore, and Colombo, bypassing trade restrictions, according to estimates of economic think tank GTRI.
Explaining the system, Global Trade Research Initiative (GTRI) said that Indian firms send goods to these ports, where an independent company offloads the consignment and keeps the products in bonded warehouses, where goods can be stored without paying duties while in transit.
"In the bonded warehouse, the labels and documents are modified to show a different country of origin. For example, Indian-made goods may be relabelled as 'Made in UAE'. After this change, they are shipped to countries like Pakistan, where direct trade with India is not allowed," GTRI Founder Ajay Srivastava said.
This method, he said, helps firms to bypass India-Pakistan trade restrictions; sell goods at higher prices, using the third country route; and avoid scrutiny, since the trade appears to come from other countries.
The higher price covers storage, paperwork, and access to a closed market.
"While this transshipment model isn't always illegal, it sits in a grey zone. It shows how businesses find creative ways to keep trade going -- often faster than governments can react. GTRI estimates Indian goods worth over USD 10 billion reach Pakistan via this route annually," Srivastava said.
The trade between India and Pakistan may come to a complete halt after New Delhi's move to close the Attari Integrated Check Post in the wake of the Pahalgam terror attack, which was followed by Islamabad's decision to suspend all trade ties, exporters have said.
The two-way trade between the countries was already miniscule following steps taken by both the sides after the Pulwama terror attack in 2019.
India's exports to Pakistan in April-January 2024-25 stood at USD 447.65 million, while imports were meagre USD 0.42 million. Exports and imports in 2023-24 were USD 1.18 billion and USD 2.88 million, respectively. -- PTI
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