Ports blocked, skies shut, trade cut: How second wave of India’s silent strikes are bleeding Pakistan’s pockets

A man fixes Pakistan’s national flags on his motorcycle on the eve of the country’s independence day, in Karachi on August 13, 2024. (Photo by Asif HASSAN / AFP)

In the aftermath of the devastating Pahalgam terror attack, India has shifted gears — moving beyond mere condemnation and diplomatic censure to a phase of calibrated coercion aimed squarely at Pakistan. What has now unfolded is nothing short of a full-spectrum economic and diplomatic offensive. New Delhi has unleashed a barrage of unprecedented restrictions, targeting Islamabad’s trade, transportation, and communication arteries with precision. These sweeping measures are designed not only to penalize Pakistan for its continued sponsorship of cross-border terrorism but also to signal a new threshold in India’s retaliatory doctrine — one that prioritizes sustained economic pain and international isolation over symbolic gestures.

In the latest round of retaliatory steps, India has banned all Pakistan-flagged merchant vessels from entering any Indian port, essentially cutting off maritime access to the world’s fifth-largest economy. It has also imposed a blanket ban on all goods imported directly or indirectly from Pakistan, choking off re-routed trade that had been surviving via third countries. In addition, India has prohibited all postal services to and from Pakistan, dismantling a crucial—if symbolic—link that had enabled people-to-people connections in times of diplomatic chill. And perhaps most disruptive of all, New Delhi has now barred Pakistani aircraft from flying through Indian airspace, creating costly detours for commercial airlines and putting additional stress on Pakistan's already struggling aviation sector.

These aggressive measures come just days after India suspended the Indus Waters Treaty and shut the Wagah-Attari border, as it launched a global diplomatic offensive to isolate Pakistan. Taken together, they amount to a severe multi-domain punishment that targets Pakistan’s economic arteries, logistical networks, and international credibility. While India maintains that these steps are necessary to hold Pakistan accountable for sheltering and sponsoring terror outfits like Lashkar-e-Taiba and Jaish-e-Mohammed, Islamabad is already reeling from the economic and diplomatic tremors. The impact is expected to be deep, multi-layered, and difficult to recover from—especially at a time when Pakistan’s economy is teetering on the edge of collapse and its global standing is under intense scrutiny.

Bilateral trade between India and Pakistan has seen a sharp decline over the past five years, with official data showing a 56.91% drop in India’s exports to Pakistan between April 2024 and February 2025 — down to just $491 million.

Ban on Pakistani Merchant Ships – Cutting a Trade Lifeline

India last week banned Pakistan-flagged merchant vessels from docking at Indian ports. In retaliation, Islamabad prohibited Indian-flagged ships from docking at any of its ports and barred Pakistani ships from accessing Indian ports.

While direct trade between India and Pakistan has been minimal since the 2019 Pulwama attack, the damage is more tangible for Islamabad since its sectors like cement, textiles, and some agricultural goods still relied on informal or third-party routes to reach Indian buyers.

Pakistani merchant vessels often used Indian ports for trans-shipment, bunkering, or maintenance. Denial of these services forces ships to reroute through longer and costlier alternatives like Oman or the UAE.

Indian ports like Kandla, Mundra, and Mumbai served as vital nodes for trade en route to Sri Lanka, Bangladesh, and East Africa. Denial of access means longer voyages and increased risk premiums, especially given rising tensions and security concerns in the Arabian Sea. Already reeling from reduced business and fleet underutilization, Pakistan National Shipping Corporation (PNSC) will face further operational and financial stress.

Ban on Pakistani Flights in Indian Airspace: Strategic and Economic Pain

The ban on Pakistani flights in Indian airspace follows Islamabad’s move to close its airspace to Indian carriers. Flights from Lahore or Islamabad to Southeast Asia, Sri Lanka, and even parts of the Middle East now require longer detours via Iran or Afghanistan. This increases fuel consumption, reduces operational efficiency, and may make routes commercially unviable.

The move indirectly nudges global aviation bodies and logistics firms to reconsider ties with Pakistan due to emerging airspace uncertainties.

However, experts and data suggest that a ban on Pakistani airlines in Indian airspace would have a lesser impact on them compared to the damage Pakistan's ban inflicts on Indian operators. This is primarily because Pakistani air travel to the East is significantly lower than Indian travel to the West.

Ban on Imports from Pakistan: A Blow to the Few Remaining Trade Channels

When India suspended most trade ties with Pakistan after the 2019 Pulwama attack, it revoked Most Favoured Nation (MFN) status and imposed 200% customs duties. Now, New Delhi has banned direct or indirect import of all goods from Pakistan with immediate effect.

"Direct or indirect Import or transit of all goods originating in or exported from Pakistan, whether or not freely importable or otherwise permitted, shall be prohibited with immediate effect, until further orders. This restriction is imposed in the interest of national security and public policy. Any exception to this prohibition shall require prior approval of the Government of India," DGFT said in the notification dated May 2.

India's imports from Pakistan have plummeted recently. Commerce ministry data shows a significant drop from $2.86 million between April 2023 and January 2024 to just $420,000 during the same period in 2024-2025.

Re-routing Pakistani goods through third countries (especially textiles, dry fruits, and surgical tools) was a critical survival route for Pakistani exporters. This loophole is now shut, choking off one of the few functioning trade corridors.

Pakistani exporters, particularly from Punjab and Sindh, often depended on the Indian market for their cotton yarn, grey fabric, and handicraft products. The informal textile trade will now be completely stifled.

Moreover, with exports already weak, Pakistan’s dollar reserves—critical amid ongoing IMF negotiations—will take another hit. Loss of even small export volumes further worsens the country’s balance of payments.

Ban on Postal Services: Symbolism with Strategic Undercurrents

The ban on postal services may seem minor compared to other measures, but it carries deep diplomatic and humanitarian ramifications.

Postal service bans are rare and usually reserved for states with whom full-scale diplomatic ties are cut. This aligns Pakistan with countries like North Korea and Iran, signaling a significant downgrading in perception.

April 23 Decisions by India

This new wave of actions came 10 days after India on April 23 – day after the terror attack - put in abeyance its 65-year-old Indus Water Treaty (IWT) with Pakistan, shut down the Integrated Check Post at Attari-Wagah border between the two countries and further curtailed its already downgraded diplomatic ties with Islamabad.

Among other measures, New Delhi also cancelled travel documents issued to the citizens of Pakistan under the SAARC Visa Exemption Scheme (SVES) and asked anyone from the neighbouring country currently in India to leave within 48 hours.

Psychological and Diplomatic Isolation

This latest series of actions by India aims not just at economic strangulation but psychological and diplomatic isolation of Pakistan. By banning everything from trade to air and sea access, India sends a message to global partners: Pakistan is a pariah state supporting terrorism.

India’s moves are timed to coincide with its diplomatic campaign to isolate Pakistan at forums like the Financial Action Task Force (FATF) and the United Nations. By portraying Pakistan as a state sponsor of terrorism, India strengthens its case for grey-listing and aid scrutiny. With almost all formal and informal ties severed, Pakistan now faces a complete breakdown of dialogue. The space for diplomatic repair narrows, and global mediators will have to choose sides.