Pakistan goods in transit via third country being banned

Indian Express

16-05-2025

THE DIRECTORATE of Revenue Intelligence (DRI), the anti-smuggling body under the Finance Ministry, has begun blocking in-transit goods originating from Pakistan that are being routed through third countries such as the UAE, a government official told The Indian Express.
The increased scrutiny by the Customs authorities follows an immediate government ban on the import and transit of all goods originating in, or exported from, Pakistan, according to a May 2 notification by the Ministry of Commerce and Industry in the wake of the Pahalgam terrorist attack.
The official said the government is closely monitoring goods arriving from Pakistan, and even consignments that may have been in transit before the May 2 notification now fall under the scope of the ban. Under normal circumstances, an exception is made for goods already at sea.
'Customs are taking action whenever there is suspicion. At a few ports, the DRI has initiated action — for instance, a Pakistani-flagged ship was not allowed to dock. Traders have been reaching out to authorities, claiming trade losses. But a strong notification was necessary to ramp up scrutiny,' the official said.
'With regard to goods arriving from third countries, it is sometimes difficult to identify Pakistani-origin goods based solely on rules-of-origin certificates. However, closer scrutiny through labelling verification often reveals the product's actual origin,' the official said.
The official said it is suspected that Pakistani dates and dry fruits have been entering India through the UAE, and the matter has been raised with the Emirati government. 'The UAE has provided production figures, claiming that it also produces dates and dry fruits. But strict notifications serve as a deterrent, even encouraging other countries to avoid bending the norms,' the official said.
Prior to the May 2 ban, India had already terminated direct trade with Pakistan, marked by the closure of the Integrated Check Post (ICP) at Attari on April 24, following the Pahalgam terror attack. That move was expected to halt cross-border trade worth Rs 3,886 crore between India and Pakistan.
According to estimates by the Global Trade Research Initiative (GTRI), about $10 billion worth of Indian goods reach Pakistan via trans-shipment hub routes.
Tensions between the two countries — particularly after the 2019 Pulwama attack — reduced bilateral trade from Rs 4,370.78 crore in 2018-19 to Rs 2,257.55 crore in 2022-23. However, trade rebounded to Rs 3,886.53 crore in 2023-24, the highest in the past five years. Notably, total cargo movement also declined from 49,102 consignments in 2018-19 to just 3,827 in 2022-23, the data shows.
In dollar terms, annual India–Pakistan trade has shrunk to about $2 billion over the past five years — a small fraction of the $37 billion trade potential estimated by the World Bank. India's overall goods trade stands at $430 billion, while Pakistan's is approximately $100 billion.
The curbing of trade marks a significant shift from the late 1990s, when India took the initiative to boost bilateral trade by extending Most Favoured Nation (MFN) status to Pakistan in 1996, leading to a surge in trading volumes. However, Pakistan never reciprocated by granting the same status to India. In 2019, India revoked Pakistan's MFN status following the Pulwama terrorist attack.
Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More