Indian firms send goods worth $10 billion every year to Pakistan via Dubai
Despite official trade restrictions, Indian firms are indirectly exporting over $10 billion worth of goods annually to Pakistan via third-party ports like Dubai, Singapore, and Colombo. This "shadow trade" involves relabelling goods in bonded warehouses to mask their Indian origin before onward shipment. While offering businesses a way to circumvent restrictions and access a lucrative market, this practice operates in a legal grey area, raising ethical concerns and potentially impacting official trade relations between the two countries.
New Delhi:
The system was explained by Global Trade Research Initiative (GTRI). It stated that Indian companies send goods to these ports, where an independent firm offloads the consignment. The goods are kept in bonded warehouses, where no duties are paid while in transit.
GTRI founder Ajay Srivastava said: “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.”
Indian firms are sending and selling goods worth over USD 10 billion (Rs 85 crore) to Pakistan annually, which is reaching the neighbouring country indirectly through ports like Dubai, Singapore, and Colombo, while bypassing trade restrictions between the two countries, as per economic think tank GTRI, a PTI report said.
While bypassing India-Pakistan trade restrictions, this method helps the companies to sell goods at a premium. As the firms use the third country port, they are able to skirt scrutiny, as nowhere is India mentioned. The increased cost covers the cost of storage, documentation, and entry into a banned market.
‘In a grey zone’
Srivastava said that transshipment model isn’t always illegal, it’s in a grey zone. “It shows how businesses find creative ways to keep trade going — often faster than governments can react.”
After the Pulwama terror attack in 2019, trade between the two countries went down substantially. From April to January 2024-25, India’s exports to Pakistan stood at USD 447.65 million, while imports were USD 0.42 million. In comparison, exports and imports for the 2023-24 period 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, while imports were valued at USD 20.11 million and USD 2.54 million, respectively.
Trade between India and Pakistan could stop completely, exporters have warned, after New Delhi’s closure of the Attari Integrated Check Post in response to the Pahalgam terror attack and Islamabad’s subsequent decision to suspend all trade relations.
India exports organic chemicals, pharmaceutical products, sugar and sugar confectionary, coffee, tea and spices, cereals, petroleum products, fertiliser, plastics, rubber, and auto components.
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