Govt collating data of indirect exports of Indian goods to Pakistan from third countries: Sources

New Delhi: The government is collating data to figure out the quantum of indirect exports of Indian goods to Pakistan from third countries in a bid to check such rerouting of shipments to the neighbouring country, sources said.

The government is working with the industry to look into alternate routes for shipments of goods through air route in the backdrop of Pakistan closing its air space for Indian carriers, they said.

Goods like flowers, fruits and vegetables are exported through air routes to regions like Middle Eastern countries.

These restrictions have been imposed following the terrorist attack on tourists in Pahalgam last week. 26 people were killed in the horrific incident, evoking a sharp response from the government.

The export data is being collected from sources like customs, export promotion councils and other departments, the sources added.

According to the economic think tank GTRI, Indian goods worth over USD 10 billion are reaching Pakistan every year indirectly through ports, such as Dubai, Singapore, and Colombo, bypassing trade restrictions.

Global Trade Research Initiative (GTRI) has stated 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 has 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.

One of the sources said the government is also examining the exports to Pakistan through online mode.

The trade between India and Pakistan is coming to a complete halt after both the countries announced closure of land routes.

The two-way trade between the countries was minuscule, following steps taken by both sides after the Pulwama terror attack in 2019.

After the terror attack in Pahalgam on Tuesday, which killed 26 people, mostly tourists, India took a series of measures, including immediate shutting down of the Attari land-transit post, used for movement of certain kinds of goods.

In retaliation, Pakistan also announced that "all trade with India, including to and from any third country through Pakistan, is suspended forthwith". This move may affect India's exports to Afghanistan.

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.

In 2022-23 and 2021-22, India exported goods worth USD 627.1 million and USD 513.82 million, and imported products worth USD 20.11 million and USD 2.54 million, respectively.

In April-January 2024-25, exports of organic chemicals and pharmaceutical products accounted for about 60 per cent of the country's total outbound shipments to Pakistan. It was USD 129.55 million and USD 110.06 million, respectively.

The other items include sugar and sugar confectionary (USD 85.16 million), certain vegetables (USD 3.77 million), coffee, tea and spices (USD 1.66 million), cereals (USD 1.39 million), petroleum products (USD 11.63 million), fertiliser (USD 6 million), plastics (USD 4.16 million), rubber (USD 1.88 million), and auto components (USD 28.57 million).

The main imports include fruits and nuts (USD 0.08 million), certain oil seeds and medicinal plants (USD 0.26 million), organic chemicals and project goods.

The India-Pakistan trade relations soured after the Pulwama terror attack.

Following that, India raised the import duty to 200 per cent on all goods imported from the neighbouring country, including fresh fruits, cement, petroleum products and mineral ore.

In 2017-18, Pakistan's exports to India were USD 488.5 million. India also withdrew the MFN (most favoured nation) status to Pakistan.

At that time, the two main items imported from Pakistan were fruits and cement. Slapping an import duty of 200 per cent effectively means almost banning imports.

Both countries have a long history of strained relations, primarily due to the Kashmir issue and the cross-border terrorism emanating from Pakistan.

The total India-Pakistan trade in 2017-18 was USD 2.41 billion against USD 2.27 billion in 2016-17. India imported goods worth USD 488.5 million in 2017-18 and exported goods worth USD 1.92 billion.