Opinion: How Make In India Can Tip The Balance Against Pakistan — Economically, Strategically, Globally
Since India launched Operation Sindoor, targetting terrorist camps in Pakistan, the Pakistani stock market has witnessed significant turbulence. In the aftermath, India appears to be shaping a comprehensive strategy to counter Pakistan not just militarily, but across multiple fronts. In the long-term fight against terrorism, India must adopt a permanent and secure approach — one that consistently exploits the adversary’s weaknesses. And Pakistan’s greatest vulnerability lies not on the battlefield, but in its fragile economy.
Targeting this economic faultline could inflict enduring damage, far more impactful than limited military strikes. By destabilising the foundations of Pakistan’s economy, India can undermine the infrastructure that sustains cross-border terrorism, achieving strategic objectives with broader and lasting consequences.
Nearly 80 years after gaining independence, at the same time, India and Pakistan now stand worlds apart in terms of economic development. India has surged ahead across virtually every economic parameter, while Pakistan continues to grapple with deep-rooted instability and remains a hub for terrorism.
According to the Food and Agriculture Organization (FAO), Pakistan is the fifth most populous country in the world but ranks 41st in terms of economic size. In contrast, India, now the most populous nation, holds the fourth-largest economy globally and is poised to surpass Germany to take the third spot.
The disparity is stark. As per World Bank 2024 data, India’s GDP stands at approximately $3.88 trillion, vastly outpacing Pakistan’s $0.37 trillion economy. India also holds $677 billion in foreign exchange reserves, while Pakistan's reserves are limited to $15.5 billion — barely enough to cover three months of imports.
Pakistan’s economy remains under severe stress, with key indicators reflecting deep-rooted vulnerabilities. The current repo rate stands at 12%, while the exchange rate hovers around 280 Pakistani rupees to the US dollar.
Nearly two years ago, the World Bank identified Pakistan as the most fragile economy in South Asia. By October 2024, the country’s government debt is expected to rise to a record 70.36 lakh crore Pakistani rupees, amounting to an average debt of 2.34 lakh rupees per citizen.
According to Fitch Ratings, Pakistan is due to repay over $22 billion in external debt in the financial year 2025. The economy is currently heavily reliant on the International Monetary Fund (IMF), making Pakistan the fourth largest borrower from the institution. Meanwhile, the Export-Import Bank of China is reportedly reluctant to provide further concessional loans.
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What India Should Do?
Severing all commercial ties with Pakistan could prove economically devastating for the latter. India should consider imposing high tariffs on Pakistan’s international trade, leveraging its strategic advantage through port access. Indian ports serve as critical logistical hubs for Pakistan’s already limited global trade routes. A complete ban on Pakistani ships at Indian ports — which were previously used for transshipment, refuelling, and repairs — would significantly raise Pakistan’s shipping costs.
With India denying these services, Pakistan will be forced to reroute via Oman or the UAE, resulting in longer, more expensive trade routes. A precedent for such economic pressure was set after the 2019 Pulwama attack, when India increased customs duty on Pakistani imports from 10% to 200%, leading to a 91% drop in imports and a loss of approximately $100 million for Pakistan.
India is now pursuing measures to completely halt trade engagements with Pakistan in the aftermath of continued cross-border terrorism.
The impact of cutting off trade with Pakistan on India’s economy would be minimal. Pakistan accounts for less than 0.06% of India’s total global trade, and Indian exporters face no difficulty redirecting goods to other international markets. Simply put, India has no reliance on Pakistani imports.
Interestingly, despite strict trade restrictions, Indian goods — worth over US$10 billion annually — continue to reach Pakistani consumers through indirect routes via Colombo, Dubai, and Singapore, according to a report by GTRI (Global Trade Research Initiative). These backdoor channels allow trade to persist informally, even in the absence of formal commercial ties.
As a result, the economic impact on India is likely to be minimal, while such measures could place considerable strain on Pakistan’s already struggling economy.
India is currently one of the world’s top five markets for goods and services and is regarded as one of the most open economies in Asia, allowing up to 100% foreign direct investment in most industrial sectors. This has made India a key destination for global businesses, attracting investment across a vast range of products — from needles to airplanes.
India’s global standing has also improved significantly. It has climbed the World Bank’s Ease of Doing Business Index from 134 in 2014 to 63 in 2023, and its rank in the Global Competitiveness Report Index has improved from 60th in 2014 to 43rd.
Over 60% of Pakistan’s exports consist of textiles and related products, primarily shipped to markets such as the United States, the United Kingdom, Germany, the Netherlands, Spain, and Italy — countries with which India enjoys strong and stable relations. Given this, India has a strategic opportunity to boost its own textile exports and position itself as a viable alternative to Pakistan in global supply chains. In this context, the relevance of the ‘Make in India’ initiative becomes even more pronounced.
To fully capitalise on this moment, India must work to eliminate internal barriers to manufacturing and exports, thereby strengthening its global trade footprint. Such a move would not only reinforce India’s economic ambitions but also intensify pressure on Pakistan’s already fragile economy.
The author is Associate Professor at Atal Bihari Vajpayee School of Management & Entrepreneurship, JNU, in New Delhi.
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