Corporate Pakistan may share in the patriotic surge across the country, but business leaders, mindful of the risks, are calling for swift de-escalation of tensions with India. Some warn the conflict threatens South Asia’s economic potential, especially as global trade pivots toward regional integration.
They note the rising pressure on the capital market, currency, and supply chains — particularly in sectors such as pharmaceuticals that depend on imports of Active Pharmaceutical Ingredients from India. If tensions persist, they warn, business losses will be unavoidable.
“Pakistan’s economy is just beginning to recover, with the public still waiting to feel the gains. War would divert scarce resources towards military spending, deepening the country’s development challenges. We simply can’t afford such an adventure,” a business leader said privately.
Hostilities spiked after the Pahalgam incident, with the Modi government instantly blaming Pakistan and announcing a series of unilateral measures. These included authorising military action, suspending the 1960 Water Treaty, closing the Wagah border, expelling Pakistani embassy staff, halting visa processing for Pakistani citizens, and ordering Pakistani visitors to leave. Later, India also closed its airspace to Pakistani flights.
If tensions persist, economic losses will be unavoidable especially as global trade pivots toward regional integration
In response, Pakistan unveiled countermeasures: it threatened to revoke the 1972 Simla Accord, closed its side of the Wagah border effective May 1, expelled all Indian nationals except Sikh pilgrims, suspended South Asian Association for Regional Cooperation visas for Indians, cut Indian High Commission staff in Islamabad to 30, closed its airspace to Indian aircrafts, and halted all trade with India.
The full economic and human toll of the current tit-for-tat measures will take time to unfold, but early fallout in Pakistan is evident. Escalating border tensions have already triggered losses, with the KSE-100 index dropping 3,055 points since the April 22 Pahalgam attack. The rupee hasn’t sharply depreciated, but its earlier stability has given way to volatility, fluctuating between Rs280 and Rs284 per dollar in the open market.
Musadaq Zulqarnain, a leading exporter and widely regarded as a voice of reason in Pakistan’s corporate sector, stated: “It’s hard to gauge the full impact at this stage, but I hope better sense will prevail”. On the effects on his own enterprise, he noted, “We haven’t seen any impact yet, our customers are preoccupied with the global disruptions caused by theUS tariffs.”
His greater concern, however, was for the vulnerable people who would suffer if the conflict escalates. Mr Zulqarnain also observed that global issues, such as Gaza, the war in Ukraine and US-Iran talks, have overshadowed the situation in South Asia.
Muhammad Ali Tabba, a prominent business leader, remained unfazed. “I don’t see a real threat of war. Both countries must show restraint, it’s in their mutual interest. India should prioritise restoring normal ties with Pakistan; sincere engagement can drive growth and reduce poverty on both sides.”
He downplayed concerns about business fallout: “The tensions have had minimal impact, just a brief market jitter. I believe major powers will pressure India to avoid escalation that could trigger a wider conflict.”
Dr Sheikh Kaisar Waheed, former chairman Pakistan Pharmaceutical Manufacturing Association warned that while the impact may not be immediate, prolonged tensions could lead to shortages of life-saving medicines. “Shipments from India have arrived at the port but aren’t being released. Customs officials haven’t provided a reason, despite SRO 977, which exempts essential pharmaceutical imports,” he said.
Banks, Mr Waheed added, are also refusing to open letters of credit or honour contracts. He noted that Indian suppliers remain willing to do business, unaffected by political rhetoric. Recalling a similar episode in 2019, he said the government then allowed continued imports of critical medicines and ingredients through SRO 977, which, he believes, is still in effect.
Chaudhry Muhammad Saeed, former president of the Federation of Pakistan Chamber of Commerce and Industry, responded in detail: “Hostilities between Pakistan and India have become a recurring pattern, but this time India’s attitude appears excessive, likely driven by internal political pressures. War would be disastrous for both sides, especially for Pakistan, whose economy is only beginning to recover. Each missile costs millions, and beyond the immediate destruction, the economic fallout is far greater.
“Pakistan has exercised restraint and pursued diplomatic channels to de-escalate tensions so far, with some success. But we need a long-term strategy; continued hostility is holding us back. With global trade increasingly region-focused, South Asia must tap its vast potential. CPEC [China-Pakistan Economic Corridor] could be a key enabler, boosting exports, transit trade and foreign investment. It’s time to revisit our policies. A neutral investigation into the incident, with Pakistan’s participation, could open the door for a new beginning,” he added.
Moin Mohajir, former Deputy Secretary General of the Overseas Investors Chamber of Commerce and Industry, downplayed the likelihood of a full-scale war citing nuclear deterrence. “India may be driving the current tensions, but despite the rhetoric, it won’t risk self-destruction. After applying maximum pressure and seeking to isolate Pakistan, it will ultimately step back.
“Though retired, the current tensions are weighing on my mind and my Pakistan Stock Exchange investments, which have plunged since the Pahalgam attack. I also worry that a prolonged downturn will erode my future dividends. So, I strongly support peace and while my lone voice may not matter, I’m ready to join any collective advocating dialogue between the two nuclear states,” he remarked.
Commenting on global inaction over escalating South Asian tensions, Mr Mohajir cited two key reasons: first, the geopolitical divide, with major powers, particularly the US and more subtly, Russia, seeking to elevate India as a counterweight to China; and second, widespread economic interests, including those of Muslim countries, that avoid confronting India for fear of losing access to its 1.5 billion-strong consumer market and low-cost exports.
Published in Dawn, The Business and Finance Weekly, May 5th, 2025
