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IMPACTS OF THE RECENT INDIA AND PAKISTAN TENSIONS

The recent escalation of tensions between India and Pakistan has led both countries to impose strict port and trade restrictions.

While all Indian ports, including those near the border with Pakistan, remain operational, the government has tightened security protocols across all terminals. Pakistani-flagged vessels are barred from entering Indian ports. Indian-flagged vessels are prohibited from calling at any Pakistani port. India has also implemented a ban on the direct import or indirect import or transit of all goods originating in or exported from Pakistan. These restrictions were introduced as part of broader trade sanctions and are being enforced rigorously across maritime, air, and land transport channels.

In response to India’s measures, Pakistan implemented similar restrictions. Indian-flagged ships are no longer allowed to enter Pakistani ports, and Pakistani-flagged vessels are also prohibited from visiting Indian ports. Pakistan has also banned the transit of goods of Indian origin through its territory, even if those goods are intended for delivery to third countries. Pakistan has prohibited imports from India by third countries. Moreover, it has banned exports from third countries to India if those shipments pass through Pakistan by land, sea, or air.

These prohibitions apply regardless of whether a Bill of Lading (B/L) or Letter of Credit (LC) was issued prior to 4 May 2025, the date these orders came into effect.

Broader Implications on Global Shipping

The overall result is a de facto trade embargo between India and Pakistan. While global trade flows remain largely unaffected, regional supply chains are experiencing significant disruptions.

At present, war-risk insurance premiums for the Arabian Sea remain unchanged, with no immediate surcharge increases attributed solely to the India–Pakistan standoff. However, industry experts caution that if hostilities escalate, insurers may revise risk assessments. The baseline war-risk premiums, already elevated due to Red Sea tensions, could be extended to the wider Gulf and Arabian Sea region or further increased.

In response to the current tensions, merchant ships operating in the region should expect heightened security measures, including stricter inspections and enhanced port surveillance in both India and Pakistan.

Experts also warn that if the conflict intensifies, vessels may begin to avoid India’s 200-nautical-mile coastal zone entirely. In such a scenario, ships could reroute along a more southerly course, for instance, west of Lakshadweep or via the Lakshadweep–Ras al Hadd corridor in the Gulf of Oman. This diversion would increase both transit times and operating costs, affecting shipping schedules and logistics planning.

Industries heavily dependent on Indo-Pak trade, such as textiles, pharmaceuticals, and agriculture, are already facing shipment delays. Major apparel and cotton brands sourcing from Pakistan’s textile industry report uncertain delivery timelines. Likewise, food and raw material exporters in both countries are seeking alternative markets and transit routes.

Given that India and Pakistan are key global exporters of rice, spices, and cotton, disruptions to their trade, even if indirect (e.g., rerouted cargo, congested warehousing, or delays at alternate ports), could have ripple effects across global supply chains.

While global carriers are factoring in potential delays and additional costs, there has been no widespread suspension of services across the Indian Ocean to date. However, shipping companies are advised to ensure that their hull and P&I policies provide coverage for acts of war and terrorism, include force majeure and war clause provisions in their contracts, and prepare for potential demurrage or diversion claims in the event of delays.

We are ready to assist cargo insurers with any claims that may face as a result of these developments.

Written by Idil Erbil

Solicitor and Claims Handler at Dolphin Maritime & Aviation Services Ltd.