In April 2025, a devastating terrorist attack in Pahalgam, Indian-administered Kashmir, claimed the lives of 26 tourists and injured many others. India attributed the attack to Pakistan-based militants, leading to heightened tensions between the two nuclear-armed neighbors. In retaliation, India launched “Operation Sindoor,” targeting alleged terrorist camps in Pakistan, while Pakistan denied involvement and condemned the strikes as acts of war.
The conflict escalated further with the suspension of the Indus Waters Treaty by India, restricting water flow to Pakistan, and Pakistan closing its airspace to Indian airlines. These developments have not only intensified geopolitical tensions but also triggered economic instability, shaking markets in both nations. The Karachi Stock Exchange plummeted, and India’s markets faced volatility.
As fears of a broader conflict grow, key sectors like trade, tourism, and aviation are feeling the strain. This article explores how the ongoing India-Pakistan conflict is impacting key industries.
Here are a few sectors that will be affected by the India-Pakistan Conflict:
1. Trade & Exports Sector
Trade between India and Pakistan has come to a stop after the Pahalgam attack. India has banned all direct and indirect imports from Pakistan. The Attari-Wagah border, a key trade route that handled Rs. 3,886.53 crore (approximately $470 million) in goods in 2023–24, is now closed.
Pakistani traders are facing big losses and shortages, especially in essential items like medicines and farm products from India. India is less affected but may see fewer imports of pharmaceuticals, chemicals, sugar, and auto components.
Pakistani ships are also not allowed at Indian ports, making trade even harder. This tension also affects global trade, as international buyers may hesitate to do business in the region due to rising risks and instability.
Also read: India-Pakistan War: Where and How to Invest During Market Uncertainty
2. Tourism sector
Tourism in Kashmir has been badly affected after the recent attack in Pahalgam, which led to hotel cancellations within just a few days. In 2024, the region welcomed three million visitors, but now tourist arrivals have dropped sharply. Countries like the U.S., the UK, and Russia have issued travel warnings against visiting Jammu and Kashmir, which has made the situation worse.
India also issued travel alerts across all 28 states, asking people to avoid non-essential travel. This has caused major losses for hotels, resorts, and travel businesses. Many people in Kashmir depend on tourism for their income, and the fear caused by the conflict is keeping visitors away.
3. Aviation Sector
The aviation industry is experiencing widespread disruptions due to the closure of airspaces and airports. After the Pahalgam attack, both India and Pakistan shut their airspace to each other’s flights. Additionally, India has closed 27 airports in its northern and western regions, resulting in the cancellation of over 430 flights.
This forced airlines to reroute hundreds of international flights, making journeys longer and more expensive. Flights between India and Europe, North America, and the Middle East now take detours, increasing fuel costs and ticket prices. Airlines like Air India and IndiGo, as well as global carriers, face operational headaches and financial losses. Some flights are delayed or canceled altogether, impacting passengers and airline revenues
Conclusion
A war between India and Pakistan causes serious problems for the economy. Important sectors like trade, tourism, and aviation are badly affected. Borders are shut, goods can’t move, people stop traveling, and markets become unstable. If the conflict continues, more people will lose jobs, businesses will suffer, and daily life will become harder for people. To fix this, peace and stability are very important so that the economy can grow and people can live better lives.
Written By – Nikhil Naik
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