Pakistan-India trade shows signs of recovery despite tensions

Pakistan's imports from India have risen again despite the formal suspension of trade between the two neighbours, according to new data from Pakistan's central bank. The figures suggest a gradual recovery in commercial flows after the sharp disruption that followed the conflict in 2025. The development comes as relations remain strained, with border and air links still shaped by the fallout from last year's fighting.

The State Bank of Pakistan said Pakistan imported goods worth $61.7m from India from July to September this year, up 69% from the same period a year earlier. The bank's payment data showed monthly payments for Indian imports fell to $9.2m in June and $8.2m in July after the conflict, before recovering to $19.6m in September. Over the full 2025-26 fiscal year, Pakistan paid $203.8m for Indian imports, down 7.6% from the previous year.

The trade figures are notable because they point to a partial rebound even though the two countries formally remain in a state of suspended trade. Government trade data put the value of imports in the latest quarter at $62.6m, slightly below $66.6m a year earlier. Organic chemicals and pharmaceutical products made up 96.2% of imports from India in 2025-26, while vaccines, blood products and similar items were the largest category by value.

Imports of vaccines for human use rose to $32.3m from $11.1m the year before. The recovery matters because Pakistan and India cut many of their remaining links after the 2025 crisis, which followed the killing of 26 people in Pahalgam in India-administered Kashmir. India blamed Pakistan for the attack, which Islamabad denied, and Pakistan responded by closing its airspace to Indian airlines, shutting the Wagah border crossing and suspending trade.

The two sides then exchanged missile and drone strikes before a ceasefire on 10 May, a conflict that underlined how quickly political tensions can spill into economic and logistical disruption. The latest data also suggest that some trade channels may be proving harder to shut down completely than the official position implies. Analysts cited in the report said the numbers point to a thaw, even if limited and uneven.

The central bank's payment data indicate that monthly averages have largely returned to pre-conflict levels, with payments averaging $19.3m in the 12 months before the fighting and $19.1m in the 13 months from September 2025. What remains unclear is whether the recovery will continue or whether it reflects only a narrow set of essential goods moving through existing channels. The official suspension of trade remains in place, and the broader political relationship is still shaped by the 2025 conflict and its aftermath.

The next data releases will show whether the recent rise in imports is sustained or whether it levels off again.

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