New Delhi: Under leadership from Prime Minister Narendra Modi, the Indian government took an unprecedented action after the fatal Pahalgam terror attack directed at Jammu and Kashmir citizens and one Nepali national. The government planned to stop all trading activities with Pakistan. The decision emerged from a Cabinet Committee on Security (CCS) meeting on April 23, 2025, where it founded the immediate closing of the Attari Integrated Cheque Post, which serves as the main trade gateway between India and Pakistan. The government executed this decision as part of its comprehensive diplomatic strategy to respond to the TRF-linked attack which LeT, based in Pakistan, executed. This article details how the border closure affects different aspects of the economy and both countries’ relations as well as neighbouring countries in the region.
Economic Implications
The vital India-Pakistan trade passage through the Attari border should face major disruptions after its closure. During 2023-24, the trade volume at the Attari land port reached ₹3,886.53 crore along with 6,871 cargo transactions and 71,563 passenger throughflows. The Attari land port served as a vital gateway for Indian exporters, through which they sent soybeans, chicken feed, vegetables, red chillies, plastic dana and plastic yarn to Pakistan, and Pakistani traders imported dry fruits, dry dates, gypsum, cement, glass, rock salt and herbs. The banning of trade activities at Attari land port puts the future of small-scale traders and manufacturing businesses in Punjab and neighbouring areas in jeopardy, as this marketplace serves as their source of income.
Attari businessmen understand the economic disadvantages yet support the government’s shutdown order because of the severe nature of the terror attack. The business will suffer due to the closure; nevertheless, our company stands beside PM Modi’s decision, according to Manjeet Singh from Attari, who runs his trade operations there. The declining trade activity at Attari since 2018-19 proves that the economic impact may be reduced because businesses had already shifted away from using this trade route.
India conducts small-scale business with Pakistan through trade, which represents an insignificant fraction of less than one-hundredth of one percent of its entire worldwide commerce. The 2023-24 trade figures between the two countries reached about $500 million, whereas India conducted total trade activities worth $1.2 trillion. The financial consequences affecting Punjab’s domestic economy will probably be short-lived, whereas national economic outcomes will remain insignificant. The challenge for Pakistan grows more significant since India remains its principal supplier of important products even though alternative trade paths are not as well built.
Diplomatic and Strategic Implications
India performs this economic embargo as part of an expanding international campaign which entails stopping treaty payments to Pakistan, officially removing military personnel from India and abolishing regional visa privileges for Pakistani residents. The series of diplomatic decisions points to an extreme deterioration between India and Pakistan, as relations had been already strained due to persistent inter-border tensions. The Government of India limits diplomatic dealings with Pakistan and blocks the Attari border entrance to build worldwide international support for curtailing Pakistan’s Inter-Services Intelligence (ISI)-led support for terrorist activities.
Foreign Secretary Vikram Misri stated that new Indian measures stemmed from “cross-border linkages” noted at the CCS meeting as India demands Pakistan firmly reject all forms of terrorist support to reach normalisation. The international community tracked this development closely because various leaders, including those from the United States as well as Saudi Arabia and Nepal, denounced the attack and showed support to India.
The decision creates a high risk of intensifying tensions throughout a highly unstable area. History shows Pakistan might choose between diplomatic actions and border pressure as its main response to this situation. Specialists predict that both trade suspension and breakdown of the Indus Waters Treaty will create worsening conditions for Pakistan’s internal situation, leading to an unstable environment that may spread to neighbouring regions.
Regional and Security Implications
The Pahalgam attack stands as the worst terrorist incident in Jammu and Kashmir since the 2019 Pulwama bombing, making security fears across the region more pronounced. Tourist areas in Baisaran Valley are under targeted attacks which threaten the tourism industry of Jammu and Kashmir that generates approximately 7% of the regional GDP. The terrorists staged this attack to challenge India’s achievement in Kashmir during the local elections.
India has chosen to block trade alongside border control measures which serve as part of a comprehensive security approach meant to stop future assaults. Indian security personnel have started Kashmir counter-terrorism operations alongside heightened protection measures in Delhi and Mumbai. The government intends to station permanent army and paramilitary troops on mountains above Pahalgam to fill security gaps.
The trade suspension measures threaten to negatively impact the border area economies that benefit from neighbourly trade relationships based on economic interdependence. The security situation in Punjab and Jammu and Kashmir faces potential risks because of this development as these regions continue to recover from the attack damage.
Political and Social Dimensions
Following PM Modi’s move, many people in India agree with him, while others maintain their doubts about the decision. Jammu and Kashmir BJP leader Ravinder Raina and other political figures from multiple parties have commended the steps as both powerful and essential to fight terrorism. Rahul Gandhi and Asaduddin Owaisi have criticised the government through their opposition to alleged intelligence shortfalls in combination with doubts regarding how well new security policies perform following the removal of Article 370.
The people of Delhi and Maharashtra protested due to their strong displeasure with the attack combined with their persistent calls for aggressive action against the situation. Through financial assistance of ₹5 lakh, the Gujarat government stands ready to support victims’ families while the government aims towards grief support and maintaining public trust in leadership.
Looking Ahead
The decision from India to block trade with Pakistan represents an enhanced dimension in its reaction to the Pahalgam attack. The economic harm expected in India will be minor, but the newly implemented policy has major diplomatic and regional impacts. By implementing trade restrictions along with other actions, the Indian government attempts to force Pakistan to take steps against terrorism while further ruining their diplomatic relationship. The government needs to strike a proper balance between security demands and economic interests alongside diplomacy because of how it manages this present crisis.