Pakistan suspend the Shimla agreement and halts bilateral trade

The Pakistani government has announced the suspension of the 1972 Shimla Agreement with India, suspended bilateral trade and host of other measures in retaliation for the Indian government’s step of suspending the Indus Water Treaty of 1960.

The Indian government announced five punitive measures against Pakistan after a terrorist attack in Pahalgam, Kashmir, in which 26 tourists were killed. The banned TRF or the Resistance Front with links to Pakistani terrorist group  Lashkar-e-Taiba (LeT) claimed responsibility for the attack.

Suspension of the Shimla Agreement and other Steps 

The National Security Council, Pakistan's highest decision-making body on national security matters, held a meeting in Islamabad on 24 April 2025. Pakistan’s Prime Minister Shehbaz Sharif chaired the meeting.

The main decisions taken at the meeting are as follows:

• Suspension of the Shimla Agreement with India
• Reduction of Indian High Commission diplomats and staff to 30 by 30 April 2025.
• Suspension of all SAARC visas for Indians.
• India's military attachés in the Islamabad High Commission were declared as persona non grata.
• Trade through the Wagah-Attari border has been closed for an indefinite period. 
• Pakistan has also closed its airspace to Indian civil aviation companies.

About the Shimla Agreement 

The Shimla Agreement was signed between India and Pakistan on 2 July 1972 in Shimla, Himachal Pradesh. 

The agreement was signed by Prime Minister Indira Gandhi and President Zulfikar Ali Bhutto of Pakistan.

The agreement marked the formal end of the 1971 war between India and Pakistan.

The 1971 war resulted in the secession of East Pakistan from Pakistan and the creation of Bangladesh.

Main Points of the Shimla Agreement 

• It converted the positions of both armies in Jammu and Kashmir at the time of the ceasefire on 17 December 1971 into the Line of Control (LOC).
• Both countries agreed not to change the LOC unilaterally. However, Pakistan violated this when its troops illegally entered Kargil in 1999.
• Both countries agreed to resolve all disputes, including the Kashmir issue, through bilateral negotiations.
• The agreement called for steps to restore diplomatic, economic, and cultural relations, including resumption of communications, travel, and trade links that had been severed due to war.
• India agreed to release 93,000 Pakistani prisoners of the Bangladesh War.

Suspension of Bilateral Trade 

Pakistan has suspended all bilateral trade with India, including through a third country.

The bilateral trade between the two countries was approximately $500 million during April-January 2024-25, accounting for just 0.06% of India’s international trade.

However, the majority of the trade is conducted through third countries. The majority of Indian goods reach Pakistan through Dubai.

In 2019, the Indian government revoked most favoured nation (MFN) status to Pakistan, and 200% duties were imposed on Pakistani goods in retaliation against the 2019 Pulwama terrorist attack.

Later in the year, the Pakistani government suspended all trade ties with India in response to the abrogation of Article 370 and the abolition of the special status of Jammu and Kashmir.

The Pakistani step will affect Indian trade with Afghanistan, as it is routed through Pakistan to India.

Also Read:

Pahalgam terror attack: Govt Suspends Indus Water Treaty & More