Indian goods worth $10 billion reach Pakistan annually via transshipment, despite restrictions : GTRI

NEW DELHI : Despite India’s official halt on direct trade with Pakistan following heightened tensions, Indian goods valued at over $10 billion make their way to the neighbouring country through indirect routes, according to a Global Trade Research Initiative (GTRI) report.

The trade facilitated through transshipment hubs like Dubai, Singapore, and Colombo, underscores the persistent demand for Indian products in Pakistan, albeit at higher costs due to complex supply chains.

The transshipment process involves Indian firms exporting goods to ports in third countries, where independent firms store them in bonded warehouses – facilities where goods are held without paying duties during transit. Here, the goods are re-labelled to mask their Indian origin, often marked as products of the transshipment country, such as “Made in UAE.”

These re-labeled goods are then shipped to Pakistan, bypassing bilateral trade restrictions.

The GTRI in its press note, cites an example. For instance, auto parts worth $100,000 exported from India to Dubai. These may be re-labelled and resold to Pakistan for $130,000, with the price increase covering storage, paperwork, and access to a restricted market.

“The practice, while not always illegal, operates in a legal grey zone, exploiting loopholes faster than regulatory responses can adapt,” the GTRI said.

India-Pakistan trade relations have been strained in recent times.