The terrorist attack in Pahalgam on April 22, 2025, which killed 26 people—including several tourists—in the Baisaran meadow of Jammu and Kashmir, starkly exposes Pakistan’s continued use of terrorism as a strategic tool against India. While The Resistance Front (TRF), a proxy of Lashkar-e-Taiba, has reportedly claimed responsibility, Indian intelligence agencies attribute logistical and operational support to Pakistan’s Inter-Services Intelligence (ISI).
The attack has drawn international condemnation, including from Saudi Arabia, the United States, and the United Arab Emirates. In its immediate aftermath, India suspended the 1960 Indus Waters Treaty (IWT) on April 23, 2025—halting flows of critical river waters to Pakistan. This assertive response must now evolve into a calibrated regime of phased economic sanctions to dismantle Pakistan’s terror infrastructure.
Pakistan’s State-Sponsored Terrorism in Jammu and Kashmir
For decades, Pakistan has pursued a strategy of asymmetric warfare, infamously articulated as “bleeding India with a thousand cuts.” Jammu and Kashmir has borne the brunt of this policy. The Pahalgam attack is emblematic of Pakistan’s objective to sabotage tourism and post-Article 370 economic recovery in the region.
TRF, widely reported to operate with ISI backing, fits the pattern seen in past attacks—such as the 2008 Mumbai carnage (166 dead) and the 2019 Pulwama suicide bombing (40 CRPF personnel). Open-source intelligence on platforms like X suggests state-enabled logistics and the reported military alertness of Pakistan’s air force in the attack’s aftermath raise serious questions of complicity. Pakistan’s harboring of UN-designated terrorists like Hafiz Saeed and Masood Azhar, coupled with its placement on the FATF Grey List (2018–2022), supports the conclusion that terrorism remains entrenched in its strategic calculus.
A Phased Techno-Legal Sanctions Model
India’s suspension of the IWT—affecting the Indus, Jhelum, Chenab, Ravi, Beas, and Sutlej rivers, which supply the bulk of Pakistan’s agricultural water—is a major policy shift. This action can be lawfully justified under Article XXI(b) of the General Agreement on Tariffs and Trade (GATT), which allows exceptions for actions taken to protect “essential security interests.” The WTO panel in Russia – Measures Concerning Traffic in Transit (2019) affirmed the self-judging nature of Article XXI(b), offering India a robust legal defense.
India must now implement a phased sanctions regime modeled on U.S. OFAC, UK, and EU systems—progressively restricting companies that do business with Pakistan from accessing India’s $3.7 trillion economy.
Phase 1: Big Tech and Telecom (within 6 months)
Target firms enabling Pakistan’s digital economy—Google, Amazon Web Services, Huawei—by requiring business separation. Google’s $10+ billion revenue from India underscores the leverage available. Precedents include OFAC’s 2019 addition of Huawei to the Entity List and EU export controls on Russian tech post-Ukraine invasion.
Phase 2: Financial Services (within 12 months)
Restrict financial institutions such as HSBC or Emirates NBD from operations involving Pakistan, modeled on OFAC’s SWIFT sanctions on Russian banks (2022). With remittances comprising nearly 8–10% of Pakistan’s GDP, largely from the Gulf, such restrictions would drive transactions underground, exposing them to regulatory scrutiny.
Phase 3: Energy and Trade (within 18 months)
Extend measures to multinational energy firms (e.g., Aramco) and Chinese manufacturers supporting Pakistan’s industrial base. The EU’s phased oil embargo on Russia (2022) offers a model. Given India’s dominant consumer base, compliance is likely.
Legal Justification and Strategic Positioning
India’s actions are consistent with its rights under international law. Article XXI(b) of GATT permits exceptions for national security, and UNSC Resolution 1373 (2001) mandates all states to prevent and suppress financing of terrorism. India’s suspension of the IWT and prospective sanctions framework would likely withstand legal scrutiny. Given the WTO Appellate Body’s current paralysis, even a theoretical dispute initiated by Pakistan or China would lack enforcement avenues.
Designating Pakistan a Terrorist State under Indian Law
India should also invoke the Unlawful Activities (Prevention) Act, 1967, to designate Pakistan as a state sponsor of terrorism. Section 35 empowers the government to notify “terrorist organizations,” and by extension, states providing safe haven and material support. Precedents exist: Jamaat-ud-Dawa was banned under UAPA in 2008, and Masood Azhar was designated in 2019. Designation would allow asset freezes, financial scrutiny, and increase India’s credibility in global counter-terror finance advocacy.
Economic and Geopolitical Calculus
The economic implications for India are minimal. Global firms have prioritized access to India’s market over less lucrative alternatives. Cloud services, telecoms, and banks can easily firewall or exit Pakistan operations. The 2020 app ban and 2019 tariff hikes demonstrate India’s capacity to implement such measures effectively. Saudi Arabia, UAE, and even Western firms are unlikely to resist, given India’s trade profile: $135 billion with China, $100 billion with the Gulf, and $120 billion with the U.S.—versus Pakistan’s $20 billion total trade footprint.
China may posture via limited economic disruption (e.g., active pharmaceutical ingredients exports) or border tensions, but its deep economic ties with India restrain escalation. The U.S., while historically balancing relations with both countries, would find it difficult to oppose a phased, legally grounded response—particularly given the attack’s civilian toll.
Addressing Critiques and Building Resilience
Critics may argue that sanctions won’t eliminate terror financing. However, targeted sanctions degrade access to formal financial systems, incentivize compliance, and isolate state sponsors. Phased action allows India to calibrate response and build international consensus. Public support, seen in Jammu protests and online, underscores a national appetite for bold but calibrated responses.
Conclusion
The Pahalgam attack and India’s suspension of the Indus Waters Treaty represent an inflection point. A phased, techno-legal sanctions strategy—targeting digital, financial, and trade flows—and a formal designation of Pakistan as a state sponsor of terrorism under UAPA can deliver lasting disruption to its terror ecosystem. India must act with resolve and clarity, signalling that the cost of cross-border terrorism will be strategic, economic, and enduring.
(The Author is Structural Engineer and Policy & Techno-Legal Analyst)
