<div dir="auto" data-olk-copy-source="MessageBody">In the aftermath of the April 22 terrorist attack in Pahalgam, Kashmir, which claimed 26 lives, India and Pakistan find themselves embroiled in a renewed cycle of diplomatic and economic hostilities. India attributes the incident to Pakistan-based militants, leading to escalated political tensions and a series of economic repercussions reverberating across both nations. From banning imports and blocking airspace to halting river water supplies and lobbying international institutions, India has weaponised its economic toolkit &mdash; and the fallout is rippling across South Asia.</div>
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<div dir="auto">What&rsquo;s unfolding now is not just a diplomatic standoff. It&rsquo;s a new form of warfare &mdash; one fought through trade, transport, and finance. While the immediate impacts are already visible, the long-term consequences could permanently reshape the subcontinent&rsquo;s economic architecture.</div>
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<h2 dir="auto">Trade ban: Symbolic strike, strategic plan</h2>
<div dir="auto">India&rsquo;s economic response commenced on May 2, with the Directorate General of Foreign Trade (DGFT) announcing a complete ban on goods imported from or routed through Pakistan, including via third countries like the UAE. Although bilateral trade has historically been limited &mdash; accounting for just 0.06% of India&rsquo;s total trade &mdash; the ban carries symbolic weight and delivers a direct blow to sectors in Pakistan reliant on Indian imports.</div>
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<div dir="auto">India&rsquo;s exports to Pakistan in FY 2023&ndash;24 were valued at $1.18 billion, while imports from Pakistan stood at just $2.88 million. Despite the modest figures, key supply chains &mdash; especially for chemicals, food, and medicine &mdash; are now disrupted. Indian ships are banned from docking at Pakistani ports, and vice versa, forcing exporters to reroute through costlier third-party ports.</div>
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<h2 dir="auto">Pakistani industries feeling the squeeze</h2>
<div dir="auto">The trade ban hits Pakistan in sectors where it&rsquo;s already vulnerable. The country imports vital inputs from India, many of which are not easily substitutable in the short term. For instance, Pakistan&rsquo;s pharmaceutical industry relies heavily on Indian raw materials, with more than 90 per cent of raw materials being imported and only 12 per cent of active pharmaceutical ingredients locally produced. A report by the Institute of Chartered Accountants of Pakistan estimated that the Pakistani pharmaceutical industry has a 50&ndash;60 per cent import reliance on India.</div>
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<div dir="auto">Industries like pharmaceuticals and processed food are likely to feel immediate pain, while the auto and chemical sectors could face medium-term disruptions due to supply chain breakdowns. Pakistan&rsquo;s economy, already grappling with inflation, will now face additional pressure from these import shortages.</div>
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<h2 dir="auto">Airspace closure: Aviation takes a hit</h2>
<div dir="auto">In a tit-for-tat move, India shut its airspace to all Pakistani carriers, mirroring Islamabad&rsquo;s earlier decision to close its skies to Indian flights. As a result, Pakistan International Airlines (PIA) now must detour via Iran or Central Asia for flights to Malaysia, the Gulf, and the Far East. This leads to higher fuel costs and longer routes, directly affecting both PIA&rsquo;s bottom line and the airline&rsquo;s ability to serve passengers efficiently.</div>
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<div dir="auto">International airlines like Lufthansa and British Airways, which once flew over Pakistani airspace, have also suspended operations, citing security risks. Consequently, Pakistan stands to lose over $30&ndash;50 million annually in overflight fees, further deepening the financial strain on the aviation sector.</div>
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<h2 dir="auto">Port closures: Maritime trade suffers</h2>
<div dir="auto">India&rsquo;s decision to bar Pakistani-flagged vessels from entering its ports has been met with retaliation from Pakistan, further disrupting maritime trade. For Pakistan, this means that major exports &mdash; such as textiles, rice, and sports goods &mdash; are now facing logistical hurdles. Pakistani exporters will be forced to use more expensive and time-consuming routes via third-party ports.</div>
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<div dir="auto">The closure of ports directly impacts Pakistan&rsquo;s shipping revenue, which is largely derived from dock handling, logistics, and shipping services. This loss could further destabilise Pakistan&rsquo;s current account, putting additional pressure on the country&rsquo;s already fragile financial situation.</div>
<div dir="auto">Indus Waters Treaty suspended: A threat to agriculture</div>
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<div dir="auto">In perhaps the most provocative move, India has suspended the Indus Waters Treaty &mdash; a World Bank-brokered agreement from 1960 that governs river water sharing. This has far-reaching consequences for Pakistan, where up to 90 per cent of agriculture relies on these rivers for irrigation. The suspension of water flow from the Jhelum, Chenab, and Indus rivers threatens to cripple Pakistan&rsquo;s farming sector, particularly in Punjab and Sindh provinces.</div>
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<div dir="auto">Farmers have already protested large-scale canal projects over concerns of water misallocation. If the suspension of the treaty continues, the agricultural sector faces the threat of massive crop failures, particularly in crucial areas like cotton production. Pakistan&rsquo;s food security, cotton exports, and rural economy are now at risk, raising the potential for internal unrest and social instability.</div>
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<h2 dir="auto">Global pressure: IMF, aid, and credit lines under review</h2>
<div dir="auto">India is also taking the economic war to international financial institutions. New Delhi has lobbied organisations such as the International Monetary Fund (IMF) and World Bank to reconsider their assistance to Pakistan, citing Islamabad&rsquo;s alleged support for cross-border terrorism. With Pakistan already under a $7 billion IMF programme, the loss of international financial backing could deepen its economic woes.</div>
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<div dir="auto">Pakistan relies on multilateral funding to service debt obligations, finance development projects, and address its growing climate crisis. If global donors scale back their aid or reallocate resources elsewhere, Pakistan could face higher borrowing costs, delays in disbursements, and the risk of a credit downgrade, further pushing the country towards an economic crisis.</div>
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<h2 dir="auto">Economic impact</h2>
<div dir="auto">India&rsquo;s post-Pahalgam response marks a shift in how it deals with cross-border terror &mdash; moving from conventional retaliation to economic isolation. While there are no troops mobilising along the border, every closed port, airspace restriction, and cancelled trade contract is a quiet but potent strike. These measures, though subtle, are strategically designed to weaken Pakistan&rsquo;s economy without triggering full-scale military conflict.</div>
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<div dir="auto">For India, the economic retaliation carries minimal direct cost but sends a clear message of resolve. For Pakistan, the tightening noose around trade, transport, agriculture, and finance will be a hard one to bear, especially as the pressure from domestic industries, international creditors, and the global community begins to mount. The price of cross-border aggression is quickly becoming too high to ignore.</div>
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<div dir="auto">According to the International Monetary Fund (IMF), India&rsquo;s GDP growth is projected to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, as pent-up demand accumulated during the pandemic has been exhausted.</div>
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<div dir="auto">In contrast, the IMF has revised Pakistan&rsquo;s projected GDP growth for 2025 to 3 per cent, down from 3.2 per cent forecasted earlier, reflecting ongoing economic challenges.</div>
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Business & Economy: From banning imports and blocking airspace, India has weaponised its economic toolkit and the fallout is rippling across South Asia

In the aftermath of the April 22 terrorist attack in Pahalgam, Kashmir, which claimed 26 lives, India and Pakistan find themselves embroiled in a renewed cycle of diplomatic and economic hostilities. India attributes the incident to Pakistan-based militants, leading to escalated political tensions and a series of economic repercussions reverberating across both nations. From banning imports and blocking airspace to halting river water supplies and lobbying international institutions, India has weaponised its economic toolkit — and the fallout is rippling across South Asia. What’s unfolding now is not just a diplomatic standoff. It’s a new form of warfare — one fought through trade, transport, and finance. While the immediate impacts are already visible, the long-term consequences could permanently reshape the subcontinent’s economic architecture. Trade ban: Symbolic strike, strategic plan India’s economic response commenced on May 2, with the Directorate General of Foreign Trade (DGFT) announcing a complete ban on goods imported from or routed through Pakistan, including via third countries like the UAE. Although bilateral trade has historically been limited — accounting for just 0.06% of India’s total trade — the ban carries symbolic weight and delivers a direct blow to sectors in Pakistan reliant on Indian imports. India’s exports to Pakistan in FY 2023–24 were valued at $1.18 billion, while imports from Pakistan stood at just $2.88 million. Despite the modest figures, key supply chains — especially for chemicals, food, and medicine — are now disrupted. Indian ships are banned from docking at Pakistani ports, and vice versa, forcing exporters to reroute through costlier third-party ports. Pakistani industries feeling the squeeze The trade ban hits Pakistan in sectors where it’s already vulnerable. The country imports vital inputs from India, many of which are not easily substitutable in the short term. For instance, Pakistan’s pharmaceutical industry relies heavily on Indian raw materials, with more than 90 per cent of raw materials being imported and only 12 per cent of active pharmaceutical ingredients locally produced. A report by the Institute of Chartered Accountants of Pakistan estimated that the Pakistani pharmaceutical industry has a 50–60 per cent import reliance on India. Industries like pharmaceuticals and processed food are likely to feel immediate pain, while the auto and chemical sectors could face medium-term disruptions due to supply chain breakdowns. Pakistan’s economy, already grappling with inflation, will now face additional pressure from these import shortages. Airspace closure: Aviation takes a hit In a tit-for-tat move, India shut its airspace to all Pakistani carriers, mirroring Islamabad’s earlier decision to close its skies to Indian flights. As a result, Pakistan International Airlines (PIA) now must detour via Iran or Central Asia for flights to Malaysia, the Gulf, and the Far East. This leads to higher fuel costs and longer routes, directly affecting both PIA’s bottom line and the airline’s ability to serve passengers efficiently. International airlines like Lufthansa and British Airways, which once flew over Pakistani airspace, have also suspended operations, citing security risks. Consequently, Pakistan stands to lose over $30–50 million annually in overflight fees, further deepening the financial strain on the aviation sector. Port closures: Maritime trade suffers India’s decision to bar Pakistani-flagged vessels from entering its ports has been met with retaliation from Pakistan, further disrupting maritime trade. For Pakistan, this means that major exports — such as textiles, rice, and sports goods — are now facing logistical hurdles. Pakistani exporters will be forced to use more expensive and time-consuming routes via third-party ports. The closure of ports directly impacts Pakistan’s shipping revenue, which is largely derived from dock handling, logistics, and shipping services. This loss could further destabilise Pakistan’s current account, putting additional pressure on the country’s already fragile financial situation. Indus Waters Treaty suspended: A threat to agriculture In perhaps the most provocative move, India has suspended the Indus Waters Treaty — a World Bank-brokered agreement from 1960 that governs river water sharing. This has far-reaching consequences for Pakistan, where up to 90 per cent of agriculture relies on these rivers for irrigation. The suspension of water flow from the Jhelum, Chenab, and Indus rivers threatens to cripple Pakistan’s farming sector, particularly in Punjab and Sindh provinces. Farmers have already protested large-scale canal projects over concerns of water misallocation. If the suspension of the treaty continues, the agricultural sector faces the threat of massive crop failures, particularly in crucial areas like cotton production. Pakistan’s food security, cotton exports, and rural economy are now at risk, raising the potential for internal unrest and social instability. Global pressure: IMF, aid, and credit lines under review India is also taking the economic war to international financial institutions. New Delhi has lobbied organisations such as the International Monetary Fund (IMF) and World Bank to reconsider their assistance to Pakistan, citing Islamabad’s alleged support for cross-border terrorism. With Pakistan already under a $7 billion IMF programme, the loss of international financial backing could deepen its economic woes. Pakistan relies on multilateral funding to service debt obligations, finance development projects, and address its growing climate crisis. If global donors scale back their aid or reallocate resources elsewhere, Pakistan could face higher borrowing costs, delays in disbursements, and the risk of a credit downgrade, further pushing the country towards an economic crisis. Economic impact India’s post-Pahalgam response marks a shift in how it deals with cross-border terror — moving from conventional retaliation to economic isolation. While there are no troops mobilising along the border, every closed port, airspace restriction, and cancelled trade contract is a quiet but potent strike. These measures, though subtle, are strategically designed to weaken Pakistan’s economy without triggering full-scale military conflict. For India, the economic retaliation carries minimal direct cost but sends a clear message of resolve. For Pakistan, the tightening noose around trade, transport, agriculture, and finance will be a hard one to bear, especially as the pressure from domestic industries, international creditors, and the global community begins to mount. The price of cross-border aggression is quickly becoming too high to ignore. According to the International Monetary Fund (IMF), India’s GDP growth is projected to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, as pent-up demand accumulated during the pandemic has been exhausted. In contrast, the IMF has revised Pakistan’s projected GDP growth for 2025 to 3 per cent, down from 3.2 per cent forecasted earlier, reflecting ongoing economic challenges.

Economic crossfire: How India-Pakistan tensions are reshaping South Asia’s financial landscape

The escalating India-Pakistan tensions in the wake of the Pahalgam terror attack have put the spotlight on the Pakistani army chief Asim Munir. In great part owing to the notoriously provocative speeches that Munir has made before the terror attack in India's Jammu and Kashmir, analysts point out that the Pakistani army chief's remarks clearly mark him as a religious zealot.

Pakistan army rift widening since Asim Munir became chief

Over 10 days after the deadly terror attack in Pahalgam that killed 26 innocent civilians, India unleashed a second wave of diplomatic and strategic measures against Pakistan.

Pahalgam attack: India intensifies strategic measures against Pakistan

The Pakistan government and military held a briefing for political parties in the context of the current security situation.

Pahalgam attack fallout: Imran Khan's party skips briefing on India-Pakistan situation

Indian forces are responding after Pakistan violated the ceasefire for the 11th straight day in Jammu and Kashmir today. As per the Indian Army, Pakistan resorted to firing across the Line of Control in various sectors. The violation has drawn a strong and effective response from the Indian Army, and this marks the 11th consecutive day of cross-border firing and ceasefire violations amid escalating tensions between the two countries following the April 22nd terror attacks in Pahalgam.

Indian forces give strong reply after Pakistani army violates ceasefire again | India-Pak fifth war

Pakistan continues to violate ceasefire along the LoC, with unprovoked firing reported in Kupwara, Poonch, Rajouri, and Akhnoor. Indian forces respond promptly as security is tightened following the Pahalgam attack.

India-Pak tensions: OGW's escape attempt caught on drone during police raid

Global powers urge calm as India and Pakistan trade blows over airspace and trade. Iran offers mediation, citing 'brotherly ties' with both nations. Will diplomacy prevail or will tensions escalate?

India-Pakistan tensions: Iran FM Araghchi to visit Islamabad, New Delhi

What happens if Pakistan fires a nuclear missile? India's robust missile shield and nuclear deterrents, including S-400s, submarines, and Agni missiles, ensure a devastating response to any nuclear attack. Watch for more details!

India-Pak tensions: If Pakistan fires nukes, it may not have time to fire another

India has stopped the flow of water from the Chenab river to the Baglihar Dam following the suspension of the Indus Waters Treaty as a diplomatic offensive against Pakistan after the Pahalgam terrorist attacks. Watch this report to know more!

India-Pak tensions: India reduced Chenab river water flow from Baglihar dam

India-Pakistan tensions: Iran offers mediation, what's next?

As tensions simmer between India and Pakistan following the Pahalgam terror attack, one fact is resoundingly clear..the two militaries are not on equal footing. Watch in for more details!

India-Pak tensions: India outpowers Pakistan in military strength and capabilities comparison

India-Pak tensions: Pakistan violates ceasefire for 10th day, Indian forces respond promptly

BSF has detained a Pakistani Ranger along the Rajasthan border. This comes after Pakistan ignored India's demand to release BSF jawan, who was captured on April 23.

India-Pak tensions: Pakistani Ranger captured by BSF in Rajasthan

Amid rising tensions with India, a senior Pakistani envoy has issued a veiled nuclear threat, claiming that Pakistan could use the full spectrum of its power—conventional and nuclear—in case of war. The diplomat dismissed concerns about military asymmetry with India and warned against underestimating Pakistan’s capabilities. Watch this report to know more!

India-Pak tensions: Pakistan envoy's nuclear threat to India amid tensions over Pahalgam attack

India-Pak tensions: Pak envoy dismisses asymmetry in military strength against India

A history of past India-Pakistan wars, all of which Pakistan has lost decisively

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Johan castell gets you an in-depth analysis of the world's biggest warzones of the week.

Is the fifth India-Pakistan war imminent?

Amidst escalating tensions with India, Pakistan's ambassador to Russia, Muhammad Khalid Jamali, has issued a stark warning, stating that Pakistan would use the full spectrum of power if a war were to break out with India. In an interview with Russian channel RT, the ambassador dismissed concerns over the asymmetry in military power between the two nations. He emphasized that Pakistan does not engage in debates over numerical strength and made it clear that, in the event of conflict, Pakistan would use both conventional and nuclear power. Watch in for more details!

Pakistan envoy's nuclear threat to India: 'Will use conventional & nuclear power in war'

Pakistan faces a wave of terror as suicide bombings, protests, and riots erupt across the country. Separatist groups and militants unleash chaos, pushing the nation's security to the brink amid deadly attacks.

Pakistan's security forces stretched by deadly attacks

The rising tensions between India and Pakistan come against the backdrop of severe economic decline, political unrest, and widespread public resentment over the military interference in civilian affairs in Pakistan. China’s economic status also remains wobbly. The Dragon country faces tough economic conditions, including a trade war with the US, which is shifting the manufacturing supply lines to India. Now, could that be the reason why China vows to support Pakistan against India?

Indo-Pak tensions: China vows support to Pakistan amid tensions

<p>A Pakistani Ranger has been apprehended by the Border Security Force (BSF) along the India-Pakistan border in Rajasthan. As reported by news agency PTI, citing official sources, on Saturday (May 3).</p>
<p>This comes two weeks after Pakistani forces detained a BSF jawan, PK Singh, along the international border in Punjab on April 23. Singh accidentally strayed from the international border while escorting farmers from the fields.</p>
<p><strong>Also read: <a href="https://www.wionews.com/india-news/bsf-jawan-detained-by-pakistan-rangers-after-accidentally-crossing-border-family-seeks-information-9000648">BSF jawan detained by Pakistan Rangers after accidentally crossing border, family seeks information</a></strong></p>
<p>It was amid rising tensions between New Delhi and Islamabad and a day after the dastardly terror attack in Kashmir's Pahalgam that claimed 26 lives of mostly tourists. It is one of the biggest attacks reported in the valley in recent times.</p>
<p>It has been over a fortnight since he has been detained. While speaking to news outlet Times of India, his wife Rajani said, "I have been receiving assurances that Purnam is well and that he will return. But there is no explanation as to why he is being held back for so long. I don't think there is enough urgency on the part of the force to get him back. I am extremely worried."</p>
<p>The Pakistani soldier has been taken into custody by the Rajasthan frontier of the force.</p>
<h2>Pahalgam terror attack</h2>
<p>The scenic location is popular among tourists for its lush green meadows and serenity. While enjoying their vacation, tourists suddenly heard rounds of gunshots, and the armed men held many at gunpoint and shot at close range.</p>
<p>The Resistance Front, which is an offshoot of the terrorist group Lashkar-e-Taiba (LeT) claimed responsibility first attack. But later denied any link, hinting that their social media account that posted the statement was 'hacked'.</p>
<p>Condemning the incident, former J&amp;K DGP Shesh Paul Vaid said, "This is Pulwama 2 moment of India. This was a Hamas-style attack on 7 October on Israel."</p>
<p>On Thursday (Apr 24), PM Modi said, "Today, from the soil of Bihar, I say to the whole world, India will identify, track and punish every terrorist and those backing them. We will pursue them to the ends of the Earth. India's spirit will never be broken by terrorism."</p>

A Pakistani Ranger has been apprehended by the Border Security Force (BSF) along the India-Pakistan border in Rajasthan. As reported by news agency PTI, citing official sources, on Saturday. Pakistan

A Pakistani Ranger has been apprehended by the Border Security Force (BSF) along the India-Pakistan border in Rajasthan. As reported by news agency PTI, citing official sources, on Saturday (May 3). This comes two weeks after Pakistani forces detained a BSF jawan, PK Singh, along the international border in Punjab on April 23. Singh accidentally strayed from the international border while escorting farmers from the fields. Also read: BSF jawan detained by Pakistan Rangers after accidentally crossing border, family seeks information It was amid rising tensions between New Delhi and Islamabad and a day after the dastardly terror attack in Kashmir's Pahalgam that claimed 26 lives of mostly tourists. It is one of the biggest attacks reported in the valley in recent times. It has been over a fortnight since he has been detained. While speaking to news outlet Times of India, his wife Rajani said, "I have been receiving assurances that Purnam is well and that he will return. But there is no explanation as to why he is being held back for so long. I don't think there is enough urgency on the part of the force to get him back. I am extremely worried." The Pakistani soldier has been taken into custody by the Rajasthan frontier of the force. Pahalgam terror attack The scenic location is popular among tourists for its lush green meadows and serenity. While enjoying their vacation, tourists suddenly heard rounds of gunshots, and the armed men held many at gunpoint and shot at close range. The Resistance Front, which is an offshoot of the terrorist group Lashkar-e-Taiba (LeT) claimed responsibility first attack. But later denied any link, hinting that their social media account that posted the statement was 'hacked'. Condemning the incident, former J&K DGP Shesh Paul Vaid said, "This is Pulwama 2 moment of India. This was a Hamas-style attack on 7 October on Israel." On Thursday (Apr 24), PM Modi said, "Today, from the soil of Bihar, I say to the whole world, India will identify, track and punish every terrorist and those backing them. We will pursue them to the ends of the Earth. India's spirit will never be broken by terrorism."

Pakistan Ranger detained by BSF from international border in Rajasthan

Suicide bombings, protests and riots grip Pakistan

While Pakistan has provoked India yet again, not only are Pakistani troops violating the ceasefire along the LoC, but Islamabad has also launched a ballistic missile test amid soaring tensions with India over the Pahalgam terror attack. Watch in for more details!

India-Pak tensions: India and Pak hold simultaneous drills amid Pahalgam attack fallout

Marking yet another escalation in tensions, Pakistan has announced a ban on Indian flagged vessels from docking at any of its ports. This decision comes a day after India imposed a similar ban on Pakistani ships and imposed a complete ban on goods imported from transiting through Pakistan.

Breaking | Pakistan shuts ports to Indian ships after New Delhi bans imports from Islamabad

Escalating its response to the April 22nd Pahalgam attack, India has completely halted cross-border trade with Pakistan, cutting off Islamabad's access to Asia's second-largest economy. New Delhi has suspended all imports from Pakistan besides shutting all its ports and airspace for Pakistani goods. Watch in for more details!

India-Pak tensions: Pak cut off from Asia's 3rd largest economy

India-Pak tensions: Pakistan tests surface-to-surface ballistic missile

On the night of 3-4 May, Pakistan, for the tenth consecutive night, violated the ceasefire along the LoC (Line of Control). The Indian army responded to the unprovoked attack "swiftly and effectively".
The killing of 26 people in India's Pahalgam, Kashmir, on Tuesday (Apr 22)—the deadliest attack on civilians in the Himalayan region in a quarter of a century—has triggered widespread public outrage across the world's most populous country. In the aftermath, New Delhi has accused Islamabad, its regional rival, of supporting "cross-border terrorism".

Breaking | Pak continues to provoke India at LoC; ceasefire violation reported in Kupwara, Baramulla

China walks a tightrope amid Pakistan-India tensions, prioritising its economic interests in the China-Pakistan Economic Corridor. Beijing vows support to Pakistan while safeguarding its strategic access to the Indian Ocean.

India-Pak tensions: China's stance due to impact of Beijing's interests in Pakistan

India-Pak tensions: China needs Pakistan for strategic access to the Indian Ocean

India takes a major economic stance against Pakistan, suspending all imports and shutting its ports and airspace to Pakistani goods. The move also includes a ban on inbound mail and parcels from Pakistan.

India-Pak tensions: India bans all inbound mail and parcels from Pakistan

Indian Foreign Minister holds crucial talks with Russian counterpart Lavrov, emphasising bilateral resolution of issues with Pakistan. The discussion comes amid heightened tensions following the Pahalgam attack.

Breaking | Russia urges India and Pakistan to resolve issues

Pakistan conducts a successful test of its surface-to-surface ballistic missile, Abdali, capable of carrying conventional and nuclear warheads. India responds, accusing Pakistan of attempting to whip up tensions between the two nations.

India-Pakistan tensions rise: India & Pakistan hold simultaneous military drills

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