India Suspends Trade with Pakistan Following Deadly Kashmir Attack
India has suspended all remaining formal trade with Pakistan and revoked visas for Pakistani nationals following a deadly terror attack in Kashmir that killed 26 people, mostly Indian tourists, officials said on Friday.
The attack in Pahalgam, a popular tourist destination in Indian-administered Kashmir, has pushed the nuclear-armed neighbors closer to conflict, with troops exchanging fire along the heavily militarized Line of Control (LOC).
“Following India’s complete trade suspension with Pakistan post-Pahalgam terror attack, formal exchanges have ceased—but unofficial routes via third countries continue to facilitate demand,” according to the Global Trade Research Initiative (GTRI).
Three Indian army officials said that Pakistani soldiers fired at an Indian position in Kashmir late Thursday. The officials, speaking on condition of anonymity, said Indian soldiers retaliated and no casualties were reported.
In Pakistan, the Ministry of Foreign Affairs declined to confirm or deny the report, with spokesperson Shafqat Ali Khan saying he would “wait for a formal confirmation from the military before I make any comment.”
On Tuesday, gunmen fatally shot 26 people, mostly Indian tourists, near the resort town of Pahalgam in Kashmir, making it the deadliest attack in Indian-administered Kashmir in a quarter-century. The victims were staying at a scenic spot in the Himalayan region when armed assailants opened fire.
A previously unknown militant group calling itself Kashmir Resistance Front claimed responsibility, though Indian authorities believe it is linked to Pakistan-based Lashkar-e-Taiba, a UN-designated terrorist organization.
Indian police have offered a two-million-rupee ($23,500) reward for information leading to the arrest of three suspects connected to the attack.
Pakistan has denied any connection to the attack, with Defense Minister Khawaja Asif telling Al Jazeera: “Accusing Pakistan won’t solve the problem of the Indian ‘occupation’ in Kashmir.”
India announced a string of punitive measures including downgrading diplomatic ties, suspending the Indus Waters Treaty, and revoking visas issued to Pakistani nationals. India also said it will reduce its staff in its high commission in Pakistan and bring down the number of Pakistani diplomats in New Delhi to 30 from 55 starting May 1.
According to the GTRI, an estimated USD 10 billion worth of goods continues to move between the two countries through informal channels via third countries, mainly the United Arab Emirates and Singapore. These shadow trade flows include Indian exports of pharmaceuticals, chemicals, tea, cotton, and auto parts, while Pakistan sends products such as Himalayan pink salt and dry fruits through these indirect routes.
Official figures show that despite the ongoing freeze, India exported goods worth USD 447.7 million to Pakistan between April 2024 and January 2025, including pharmaceuticals (USD 110.1 million), APIs (USD 129.6 million), and sugar (USD 85.2 million).
The United Nations has called for “maximum restraint” amid warnings of a wider military escalation between the countries, which have fought three wars over Kashmir since gaining independence from Britain in 1947.
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