From Pahalgam to Portfolios: How the Kashmir Attack Reshaped Indo-Pak Trade and Global Supply Chains

By Vijay Bhasin, International Trade Expert & Blogger

🌍 A Tragedy in Kashmir: The Pahalgam Attack

On April 22, 2025, a horrific incident occurred in the Baisaran Valley near Pahalgam, Jammu and Kashmir. Armed militants targeted civilians, leading to the tragic deaths of 26 tourists and injuries to over 20 individuals. Initially, a group known as The Resistance Front (TRF) claimed responsibility but later withdrew the statement, raising further questions and concerns.

This act of violence, among the most severe since the 2008 Mumbai attacks, has significantly heightened tensions between India and Pakistan, reigniting long-standing geopolitical friction in the Kashmir region.

✨ Akshaya Tritiya: A Ray of Optimism

As India celebrates Akshaya Tritiya on April 30—a day rooted in prosperity, success, and the launch of new endeavors—it reminds us of the strength of hope and renewal. For Indian businesses, especially exporters, this occasion is an ideal time to initiate fresh collaborations, develop global markets, and reaffirm a long-term growth mindset. It is a cultural cue to look ahead, adapt, and build resilient strategies.

🔥 Diplomatic Fallout: A Rapid Deterioration

Following the Pahalgam incident, India directly blamed Pakistan for supporting cross-border militancy. The Indian government's countermeasures were extensive:

Indus Waters Treaty Suspension: India put on hold the long-standing water-sharing treaty that governs the usage of the Indus River basin.

Diplomatic Retaliation: Indian authorities expelled Pakistani diplomats, ceased visa services, and closed major border crossings such as the Attari-Wagah route.

Trade Restrictions: All formal trade with Pakistan was immediately suspended, impacting bilateral commerce in key sectors such as pharmaceuticals, chemicals, and textiles.

In response, Pakistan:

Closed Its Airspace: Pakistani authorities banned Indian carriers from transiting through their airspace, causing disruptions to commercial aviation.

Paused the Shimla Agreement: The foundational bilateral treaty aimed at peaceful engagement was indefinitely shelved.

📉 Economic Repercussions: Trade and Market Turmoil

India’s Position

India’s exports to Pakistan form a minimal share of its global trade. However, the symbolic effect is considerable. According to Indian trade bodies, the halt in trade will not significantly affect the Indian economy but could make essential goods costlier for Pakistan.

Nonetheless, policymakers are cautious. The Ministry of Finance warned that prolonged geopolitical instability could result in logistical delays, increased operational costs, and weakened investor sentiment.

Pakistan’s Predicament

Pakistan is likely to face a steeper challenge. Dependence on Indian imports for critical sectors—especially pharmaceuticals and chemical inputs—means alternative sourcing will be both expensive and time-consuming.

Moreover, the suspension of the Indus Waters Treaty threatens Pakistan’s agricultural sector, which is heavily reliant on the flow of water from the Indian side of the border.

🌐 Global Supply Chains: Ripple Effects Beyond Borders

Tensions between India and Pakistan don't just affect the subcontinent—they create ripple effects across global logistics and supply chains:

Aviation Re-Routing: Airlines are forced to take longer routes, raising costs and travel times.

Overland Instability: Trade routes connecting South and Central Asia face uncertainty, which may deter investors.

Investor Hesitation: Global financiers might delay or withdraw from regional projects due to perceived risk.

🛡️ Compliance and Regulatory Challenges

The changing political landscape imposes compliance burdens on international businesses:

Revised Export Controls: Companies must navigate new restrictions and ensure alignment with both national and international regulations.

Vetting Supply Chains: Businesses must strengthen due diligence across suppliers to avoid inadvertent violations or reputational damage.

Enhanced Risk Mitigation: The current situation demands flexible contingency planning, inventory buffers, and alternate transport networks.

🤝 Global Diplomacy and Reactions

The global community has taken note of the developments:

United States Involvement: The U.S. has expressed concern and is reportedly in diplomatic dialogue with both nations to prevent further escalation.

International Appeals: World leaders have called for calm, stressing the need for cooperation and de-escalation in a volatile nuclear-armed region.

🔮 Future Outlook: Building Resilience Amid Tension

Here’s how exporters and policymakers can navigate these uncertain times:

Diversify Suppliers and Routes: Avoid over-reliance on any single trade route or market.

Strengthen Partnerships: In times of volatility, dependable international collaborations become vital.

Scenario-Based Planning: Organizations should prepare for a range of outcomes—from temporary disruptions to extended diplomatic standstills.

📌 Conclusion

The recent terror incident in Kashmir has reawakened geopolitical sensitivities and redefined trade equations between India and Pakistan. While the economic fallout for India may be limited, the broader message is clear—geopolitical shocks can disrupt global trade in unpredictable ways.

On this Akshaya Tritiya, a day that symbolizes growth and endless opportunity, let exporters, entrepreneurs, and policymakers commit to strategies that enhance resilience, reduce dependency on conflict-prone corridors, and champion peace through trade.

For continuous insights on export trends and international affairs, follow our blog and stay ahead of the curve.