Al Jazeera Exposes $10 Billion India-Pakistan Trade Secret Hidden Behind Official Data

Al Jazeera published a groundbreaking report revealing a $10 billion trade secret between India and Pakistan, a figure starkly contrasting official data that suggests minimal economic exchange between the two nations. Despite frosty diplomatic relations and trade bans, this clandestine commerce thrives through indirect routes, exposing a complex web of economic interdependence obscured by political rhetoric. This article delves into the mechanics of this hidden trade, its implications, and the challenges it faces amid escalating tensions, as uncovered by Al Jazeera’s investigative journalism.

The Official Narrative vs. the Hidden Reality

Official trade statistics paint a picture of negligible economic interaction between India and Pakistan. According to data for April 2024–January 2025, India’s exports to Pakistan totaled $447.65 million, while Pakistan’s exports to India were a mere $420,000. In 2023–24, India’s exports stood at $1.18 billion, with imports at $2.88 million. These figures reflect a sharp decline since 2019, when India revoked Pakistan’s Most Favoured Nation (MFN) status following the Pulwama terror attack, and Pakistan retaliated by suspending most trade, except for critical sectors like pharmaceuticals.

However, the Global Trade Research Initiative (GTRI), an India-based think tank, estimates that unofficial Indian exports to Pakistan reach a staggering $10 billion annually—five times the official trade volume before 2019. This discrepancy arises from a sophisticated system of indirect trade routed through third countries, which Al Jazeera’s report brought to global attention. The revelation underscores how economic realities often outpace political posturing, with markets finding ways to meet demand despite formal restrictions.

How the Hidden Trade Operates

The $10 billion trade operates through a well-orchestrated network of intermediary ports in Dubai (United Arab Emirates), Colombo (Sri Lanka), and Singapore. GTRI founder Ajay Srivastava, quoted in Al Jazeera’s report, detailed the process: Indian goods are shipped to these transit hubs, stored in bonded warehouses, and re-documented to obscure their origin. Labels are altered to show a new country of origin—often the UAE, Singapore, or Sri Lanka—before the goods are re-exported to Pakistan. This transshipment model, while not always illegal, operates in a “grey zone,” allowing businesses to bypass trade restrictions, avoid scrutiny, and command premium prices.

For example, an Indian textile shipment might be sent to Dubai, relabeled as “Made in UAE,” and then sold to a Pakistani importer. Similarly, Colombo serves as a transshipment hub for electronics and chemicals, while Singapore facilitates complex financial transactions to blur the trade trail. This system ensures that Indian manufacturers maintain access to Pakistan’s market without direct political repercussions, while Pakistani consumers continue to rely on Indian goods for their price and quality advantages.

Key Indian exports include pharmaceuticals, petroleum products, textiles, chemicals, tea, and machinery, which dominate Pakistan’s import needs. Pakistan, in turn, exports copper, glassware, organic chemicals, sulphur, fruits, nuts, and oilseeds to India, though on a much smaller scale. The trade’s opacity benefits middlemen in transit hubs, who charge fees for storage, repackaging, and re-export, ultimately increasing costs for Pakistani consumers.

Historical Context and Political Tensions

India-Pakistan trade began after the 1947 partition, with volumes growing when India granted Pakistan MFN status in 1996 under World Trade Organization rules. However, bilateral tensions, including wars and cross-border incidents, prevented trade from reaching its full potential. The 2019 Pulwama attack, which killed 40 Indian security personnel, marked a turning point. India imposed 200% tariffs on Pakistani imports and closed direct trade routes, while Pakistan banned Indian goods outright. The Wagah-Attari Integrated Check Post (ICP), the only land port for trade, became a symbol of this severed link.

Despite these measures, demand for Indian goods in Pakistan—particularly pharmaceuticals, agricultural inputs, and textiles—remained strong. Traders adapted by leveraging third-country routes, creating a shadow economy that Al Jazeera’s report has now exposed. The report highlights how this trade persists as an “open secret,” with posts on X echoing public sentiment that it underscores economic pragmatism over political hostility. One user remarked, “Look at this and they are going to fight a war. It’s just a publicity stunt,” reflecting skepticism about the feasibility of fully halting trade.

Recent Escalations and Their Impact

The Al Jazeera report coincides with heightened tensions following a deadly attack on April 22, 2025, in Pahalgam, India-administered Kashmir, where gunmen killed 26 people, marking the deadliest assault in the region in 25 years. India accused Pakistan of involvement, a claim Islamabad denied, calling for a neutral investigation. Both nations retaliated with diplomatic measures: India suspended its participation in the Indus Waters Treaty, closed the Wagah-Attari border, and reduced diplomatic staff. Pakistan responded by suspending all trade, including third-country routes, closing its airspace to Indian airlines, and ordering Indian citizens (except Sikh pilgrims) to leave within 48 hours.

Shantanu Singh, an international trade lawyer, told Al Jazeera that Pakistan’s pharmaceutical sector, heavily reliant on Indian imports, will face immediate disruptions. The closure of the Wagah-Attari ICP will also increase trade costs, impacting not only India-Pakistan commerce but also Afghanistan’s imports, which rely on this route. Local economies around the border, dependent on cross-border activity, are likely to suffer.

However, enforcing a ban on indirect trade is challenging. Private entities manage rerouting, and customs agencies struggle to verify the true origin of goods. Al Jazeera’s report notes that this “grey-zone strategy” highlights how trade adapts faster than policy, a point Srivastava emphasized: “Businesses are finding creative ways to keep trade going—often faster than governments can react.”

Implications and Challenges

The $10 billion trade secret has significant implications. For India, it ensures market access without diplomatic fallout, allowing manufacturers to profit quietly. For Pakistan, it meets critical needs but at a higher cost, burdening consumers with inflated prices due to middlemen’s fees. The system also raises concerns about transparency, as it may overlap with illicit networks, undermining formal trade frameworks.

Al Jazeera’s exposure brings this issue to the forefront, prompting questions about sustainability amid new hostilities. Posts on X reflect mixed sentiments: some view the trade as a pragmatic necessity, while others question its viability given recent escalations. One user noted, “India has shut down Pakistani films, dramas, talk shows, V-logs and music but the $10 Billion is Secret for the ‘elite capture’?” highlighting perceived hypocrisy in cultural bans versus economic leniency.

The trade’s future is uncertain. Political compulsions in both countries favor hardline stances, yet economic realities suggest that markets will continue to find workarounds. Blocking indirect routes entirely would require unprecedented coordination between governments and customs agencies, a difficult feat given the involvement of third countries. Moreover, Pakistan’s reliance on Indian pharmaceuticals and India’s economic stake in Pakistan’s market create mutual incentives to maintain some level of trade, albeit covertly.

Conclusion

Al Jazeera’s exposé of the $10 billion India-Pakistan trade secret reveals a striking contrast between official data and economic reality. By uncovering the intricate system of third-country transshipment, the report highlights the resilience of market forces in the face of political barriers. While recent tensions, including the Pahalgam attack and subsequent trade suspensions, threaten this shadow economy, history suggests that trade will adapt, as it has since 2019. The challenge lies in balancing economic pragmatism with political accountability, a task made urgent by Al Jazeera’s spotlight on this hidden commerce. As one X post aptly stated, “The $10 billion reality shows that on the ground, markets find a way,” underscoring the enduring link between these archrivals.

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