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Indian Goods Worth $10 Billion Annually Reach Pakistan via Third-Country Routes

Despite tightened trade restrictions post-Pahalgam attack, exporters exploit transshipment hubs like Dubai and Colombo to sustain economic ties.

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Despite restrictions, $10 billion in Indian goods slip into Pakistan each year via backdoor trade: GTRI study

Overview

  • Indian exports to Pakistan are rerouted through third-country ports, including Dubai, Singapore, and Colombo, to bypass trade restrictions, according to GTRI estimates.
  • Exporters use bonded warehouses to relabel goods and alter documentation, masking Indian origin and enabling entry into Pakistan.
  • This transshipment model operates in a legal grey area, allowing businesses to maintain trade flows despite bilateral trade curbs.
  • Relabeled goods are sold in Pakistan at a 30% markup, accounting for storage, documentation, and restricted market access costs.
  • India recently escalated diplomatic measures, closing the Attari ICP, pausing the Indus Waters Treaty, and suspending the SAARC Visa Exemption Scheme following the Pahalgam terror attack.