By: Col Chaudhry Muhammad Sabahuddin (Retired)
Introduction
The Indo–Pakistan–Afghanistan trade triangle has long been shaped by geography, political rivalries, and evolving regional power alignments. For centuries, Afghanistan’s commercial lifelines naturally ran through the territory of present-day Pakistan, embedding both economies in a deeply interdependent system well before the emergence of modern borders. India, despite strong political and developmental engagement with Afghanistan, remained geographically constrained by the absence of direct overland access, an enduring limitation that continues to shape its regional strategy.
Today, this triangular relationship stands at a critical inflection point. Recurrent border closures, the breakdown of transit assurances, and the securitization of trade routes have exposed structural vulnerabilities that accumulated over decades. These disruptions are not merely commercial; they carry strategic, humanitarian, and geopolitical implications. Understanding the historical foundations, recent shocks, and emerging opportunity spaces is therefore essential, not only to assess who bears the greatest immediate losses, but also to evaluate how regional actors are recalibrating their long-term economic and strategic postures.
Historical Background
Pre-1947 and Early Commercial Patterns
For centuries, Afghanistan’s trade flowed through the Khyber and Chaman corridors via Torkham in the north and Spin Boldak – Chaman in the south, towards the ports of Karachi, later, Gwadar and onward to markets across British India. These geographic realities persisted after 1947, anchoring Afghanistan’s economic orientation toward Pakistan by necessity rather than choice.
Pakistan–Afghanistan: A Structurally Interlocked System
Over time, Pakistan emerged as Afghanistan’s principal commercial partner due to contiguity, integrated supply chains, and access to global seaports. This interdependence was formalized through the 1965 Transit Agreement and later the Afghanistan–Pakistan Transit Trade Agreement (APTTA) of 2010, which codified Afghanistan’s rights as a landlocked state and institutionalized Pakistan’s role as its primary gateway. Alongside formal trade, extensive informal and border-market commerce sustained livelihoods across both sides of the frontier.
India–Afghanistan: Political Proximity, Geographic Constraint
From the early 1950s, India cultivated strong political and developmental ties with Afghanistan, investing heavily in infrastructure, education, health, and reconstruction. However, Pakistan’s refusal to permit India–Afghanistan overland transit forced New Delhi to rely on costly alternatives: air corridors and sea–land routes via Iran, including the Chabahar–Zaranj–Delaram axis. These routes typically add several days to delivery timelines and nearly double logistical costs, limiting scale and sustainability.
India–Pakistan: Trade Subordinated to Politics
Bilateral trade between India and Pakistan has remained hostage to political relations. Periods of limited normalization, most notably between 2004 and 2014 produced modest trade growth, but every major crisis resulted in abrupt suspensions. Pakistan’s decision to halt bilateral trade in August 2019 sharply curtailed official commerce, leaving only minimal third-country routing.
Recent Trade Snapshot
• Pakistan–Afghanistan: Pakistan has remained Afghanistan’s dominant trade partner, supplying foodstuffs, construction materials, pharmaceuticals, and textiles. The bulk of Afghan imports traditionally transited through Torkham and Chaman, making Pakistan’s routes economically irreplaceable in the short term.
• India–Afghanistan: India–Afghanistan trade over the last year is estimated at approximately USD 0.9 billion (including goods, services, and assistance). UN COMTRADE data indicates Indian exports to Afghanistan in 2024 at roughly USD 333 million, reflecting structural limits imposed by the absence of land connectivity.
• India–Pakistan: Prior to the 2019 suspension, Indian exports to Pakistan were valued in the few billions of dollars annually. Since then, official trade has collapsed, surviving only through indirect and informal channels
Comparative Assessment of Trade Relationships
Afghanistan–Pakistan
Strengths:
• Lowest transportation costs due to contiguity
• Direct access to Pakistan’s seaports
• Deep-rooted border markets sustaining millions
Vulnerabilities:
• Recurrent border closures linked to security incidents
• Smuggling that erodes state revenues
• Persistent mistrust over militancy and sovereignty concerns
India–Afghanistan
Strengths:
• Long-standing goodwill from reconstruction assistance
• Strong demand–supply complementarity
• Investment in alternative corridors via Iran
Constraints:
• Absence of overland access through Pakistan
• Higher costs and longer transit times
• Exposure of investments to political volatility
India–Pakistan
Strengths:
• Significant latent potential due to proximity and market size
• Rapid expansion possible during diplomatic openings
Constraints:
• Chronic political disruptions
• Non-tariff barriers and strategic mistrust
Impact of the Recent Pakistan–Afghanistan Trade Closure
Afghanistan
As a landlocked state heavily dependent on Pakistani routes, Afghanistan has suffered the most immediate and severe consequences:
• Prices of essential commodities have surged by three to four times
• Fuel, food, medical, and construction supply chains have fractured
• Humanitarian deliveries face prolonged delays
• Inflationary pressures threaten broader socioeconomic instability
Pakistan
• Loss of transit revenues and contraction of border economies
• Disruption of Pakistan’s access to Central Asia via Afghan territory
• Expansion of informal and smuggling networks
• Reduction in dollar inflows associated with Afghan trade
India
• Sharp increase in logistics costs
• Delays and inflation in Afghan development projects
• Continued reliance on air and Iran-based routes that remain functional but expensive
Regional Spillovers
• Growth of illicit trade when formal channels close
• Strain on humanitarian operations
• Increased relevance of Iranian and Central Asian corridors
• Gradual reshaping of regional trade alignments
Strategic Options Available
Afghanistan
• Diversify transit through Iran and Central Asia
• Negotiate security-linked reopening with Pakistan
• Build internal buffers through stockpiling and local production
• Digitize customs to reduce corruption and leakage
Pakistan
• Conditional reopening tied to verifiable counter-terror guarantees
• Enhanced border management using scanners and electronic tracking
• Anti-smuggling reforms through tariff rationalization
• Internationally monitored economic corridors
India
• Expand Chabahar utilization
• Increase air freight for critical supplies
• Deepen economic engagement through aid and credit
• Exploit commercial vacuums created by Pak–Afghan tensions
Who Suffers More and Who Gains?
In the immediate term, Afghanistan bears the heaviest burden due to its overwhelming
dependence on Pakistani transit routes. Pakistan’s losses, while real, are more diffuse and
gradual, manifesting through lost revenues and strategic leverage.
Over the medium to long term, prolonged closures risk pushing Afghanistan toward permanent
diversification, thereby eroding Pakistan’s traditional advantage as the region’s primary transit
hub. India and Iran stand to gain incrementally, though India’s gains remain constrained by cost
and geography.
Pakistan’s Key Concerns After the Closure (Refined Summary)
1. Diplomatic regression following unmet security assurances after 2021
2. Kabul’s denial of cross-border militancy as a shared responsibility
3. Limits of third-party mediation without on-ground verification
4. Need for a dual-track intelligence and diplomatic evidence framework
5. Risks of escalation from unilateral kinetic actions
6. Strategic economic losses affecting Central Asia ambitions
7. Dialogue and phased reopening as the only sustainable end-state
Conclusion
The disruption of Indo–Pakistan–Afghanistan trade is not a temporary commercial interruption but a manifestation of deeper security deficits and structural mistrust. Afghanistan faces the most immediate economic distress, while Pakistan risks the gradual erosion of its strategic transit advantage if reliability is not restored. India, despite logistical constraints, is actively leveraging the disruption to expand its regional footprint.
Sustainable regional connectivity cannot be achieved through coercive closures or unilateral actions. It requires verifiable security guarantees, monitored transit mechanisms, and phased confidence-building measures that balance national security imperatives with humanitarian and economic realities. Only a negotiated, conditional, and institutionally anchored approach can restore stability and prevent long-term strategic realignments detrimental to regional equilibrium.
NOTE: Col. (Retd) Chaudhry Muhammad Sabahuddin is a senior security analyst. He can be reached at:
Email: Chaudhry186@yahoo.com
Article ( Afghan-Pak, Afghan-India) Trade Dynamics (PDF file of this article that carries more details)
