How India’s economic warfare threatens stability in SA

In April 2025, India suspended the Indus Water Treaty (IWT), a decades-old agreement with Pakistan.

Prime Minister Narendra Modi openly threatened to “use the Indian river for India,” signaling the weaponization of a shared resource.

This move is part of a broader strategy to undermine and isolate Pakistan economically.

Whether it’s the IWT suspension, promotion of the India-Middle East-Europe Economic Corridor (IMEEC), or lobbying against Pakistan’s Generalized Scheme of Preferences Plus (GSP+) status, India’s actions reflect an economic warfare agenda.

This campaign began in February 2019, when India revoked Pakistan’s Most Favoured Nation (MFN) status and imposed a 200% tariff on imports from Pakistan, essentially ending bilateral trade.

The IWT suspension aligns with India’s pursuit of regional hegemony.

Pakistan, which relies heavily on the Indus, Chenab, and Jhelum rivers, faces grave consequences.

Agriculture constitutes 23% of its GDP and employs 37.4% of its workforce.

Disruption in water flow threatens food security, rural livelihoods, and can even cause flooding, as evidenced by India’s water release through the Uri Dam shortly after suspending the treaty.

India’s pattern of using economic tools for political coercion is not new.

After the Pahalgam attacks in Indian Illegally Occupied Kashmir (IIOK), India tried to block Pakistan’s IMF bailout.

Defence Minister Rajnath Singh made baseless accusations to halt Pakistan’s programme, but the IMF approved a $1.4 billion fund and pledged continued support.

India then threatened to have Pakistan re-listed on the Financial Action Task Force’s (FATF) grey list, leveraging its membership to pressure Pakistan as it did from 2018 to 2022.

India has also lobbied against Pakistan’s GSP+ status in the EU, which provides duty-free access to 66% of tariff lines—accounting for nearly 30% of Pakistan’s exports to the bloc.

This has significantly benefitted Pakistan’s textile sector.

By portraying Pakistan negatively, India influenced the EU Parliament’s 2021 resolution to review the status.

Though the effort didn’t succeed, it generated damaging scrutiny.

Losing GSP+ could severely impact Pakistan’s economy, reduce exports, and widen the trade deficit.

In parallel, India is weaponizing infrastructure and trade diplomacy.

The IMEEC—announced at the 2023 G20 Summit with backing from the US, UAE, Saudi Arabia, and the EU—is designed to bypass Pakistan by diverting trade away from its land routes and ports.

This geo-economic move counters the China-Pakistan Economic Corridor (CPEC) and aims to deprive Pakistan of transit revenues and logistics development opportunities.

What we are witnessing is not a mere shift in trade policies or treaties but a calculated effort to reconfigure regional power through economic coercion.

India is using trade, water, and diplomacy as punitive tools, with serious consequences for Pakistan and broader South Asian stability.

It is essential for Pakistan to expose these actions on international platforms and demonstrate how India’s Hindutva-driven statecraft threatens regional peace.

—The writer is associated with the Centre for Aerospace and Security Studies, Lahore. ([email protected])

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}