Context:

India has recently decided to shut down the Integrated Check Post (ICP) at Attari following the Pahalgam terror attack. This has cast a shadow on the already fragile trade relations between India and Pakistan. The closure is expected to halt bilateral trade worth ₹3,886.53 crore, directly affecting regional economic activities and livelihoods, especially in Punjab. 

Evolution of Trade through the Attari ICP

The Attari-Wagah land route was opened for trade in 2005, with truck movements beginning in 2007. The Integrated Check Post (ICP) at Attari was formally inaugurated on April 13, 2012, under the UPA government.

Spread over 120 acres, the ICP offers direct access to National Highway 1, making it a critical trade corridor between the two countries.

Goods traded through this corridor reflected complementary needs:

• India exported: soya bean, poultry feed, vegetables, red chillies, plastic granules, plastic yarn, and straw reapers.
• India imported: dry fruits, dates, gypsum, cement, glass, rock salt, and herbs from Pakistan.

Trade Trends and Political Tensions

The Attari ICP saw substantial trade growth until bilateral tensions began affecting volumes:

Trade volumes declined notably after India imposed a 200% duty on Pakistani goods in 2019 in response to the Pulwama terror attack.

The duty hike nearly froze formal trade for several years. A partial rebound in 2023–24 suggested cautious optimism before the latest closure again suspended activity.

In dollar terms, bilateral trade has been limited to around $2 billion annually over the past five years, a small fraction of the $37 billion trade potential estimated by the World Bank.

Impact on Punjab's Regional Economy

Punjab, particularly the regions around Amritsar and Attari, has borne the brunt of trade suspensions. The local economy has developed a robust trade ecosystem centered around the Attari ICP, providing direct and indirect employment to thousands:

• Employment generated: transporters, porters, customs agents, shopkeepers, and small-scale industrial workers.
• Key export from Punjab: Straw reapers, manufactured by small-scale units.

The drop in exports due to trade restrictions caused significant financial losses for local manufacturers. Under normal trade conditions, 2020–21 could have marked a record year.

Pakistan’s Economic Crisis:

• Post-pandemic high inflation, rising food and fuel prices.
• Violent protests in Pakistan-occupied Kashmir (PoK) in May 2023 against economic hardships led to civilian unrest and over 90 injuries.
• The International Monetary Fund (IMF) recently downgraded Pakistan’s growth forecast to 2.6%, citing global trade tensions and high U.S. tariffs.

Conclusion

The Attari ICP has historically functioned as a crucial bridge for India-Pakistan trade, particularly benefiting Punjab’s economy. The recurring political tensions and consequent trade halts, however, underline the fragility of such engagements. While trade restrictions serve geopolitical and national security interests, they disproportionately affect local economies, small manufacturers, and bilateral economic potential. In light of the World Bank’s $37 billion trade estimate, the current annual figure of $2 billion is a stark reminder of the opportunity cost of strained diplomatic ties. Restoring stable trade relations will require political will, confidence-building measures, and sustained dialogue.