The Pahalgam Terror Attack

On April 22, 2025, a brutal terrorist attack unfolded in Pahalgam, Jammu and Kashmir, when five heavily armed militants ambushed a group of tourists in the Baisaran Valley area, a popular trekking destination. The attackers, reportedly affiliated with Pakistan-based militant groups, targeted a civilian convoy, consisting primarily of Indian nationals, with automatic weapons and grenades.

The militants segregated the men from the women and children, and executed 26 people, including 25 Indian nationals and one Nepalese. In some instances, victims were subjected to tests to verify their religious identity before being killed. The attackers, familiar with the terrain, managed to evade capture by fleeing into the dense forests of the region, leaving authorities scrambling for answers.

The attack sent shockwaves through the nation, highlighting the escalating security threat in Kashmir. The violence marked a disturbing escalation in the ongoing conflict between India and Pakistan, reigniting concerns about terrorism and the safety of tourists visiting the region.

India’s Response to the Attack

In the aftermath of the attack, the Indian government acted swiftly and decisively. Here are the key measures taken by India:

1. Diplomatic Measures:

   • India immediately summoned Pakistan’s High Commissioner in New Delhi to lodge a strong protest over the attack and demanded Pakistan take action against the militants allegedly operating from its soil.

   • The Indian government expelled Pakistan’s military attaché in New Delhi as a symbolic gesture to express its outrage.

   • India suspended the Indus Waters Treaty with Pakistan, citing security concerns regarding the flow of water through the region controlled by Pakistan. This is a major diplomatic move, as the Indus Waters Treaty has been in effect for over six decades, and its suspension has far-reaching implications on bilateral relations.

   • India also closed the Attari-Wagah land border, halting cross-border trade and transport between India and Pakistan.

2. Military and Security Measures:

   • Following the attack, India increased its military presence along the Line of Control (LoC) and in the Kashmir Valley. Security forces were deployed to conduct extensive searches for any remaining militants involved in the attack.

   • The Indian military increased air surveillance and launched counter-terrorism operations, targeting militants across the region, including areas under Pakistani control.

3. Internal Security and Counter-Terrorism Operations:

   • In the days following the attack, India initiated a nationwide counter-terrorism sweep, which resulted in the arrest of multiple suspects with alleged ties to terrorist organizations operating out of Pakistan.

   • Authorities also demolished buildings and homes believed to be providing safe havens to militants, in a bid to cut off the supply lines and networks that enable terrorism.

   • Enhanced security measures were implemented in the region, including curfews in certain areas of Jammu and Kashmir, along with increased patrols and intelligence gathering.

4. Economic Measures:

   • India has been focused on addressing the economic fallout from the attack, including the suspension of cross-border trade with Pakistan. This move is aimed at cutting off any financial or material support that could flow to militant groups through commercial routes.

   • Furthermore, with the region’s tourism sector heavily impacted, the government has pledged to provide financial assistance to affected businesses and local economies in Pahalgam and other tourism-dependent areas. There is also a concerted effort to boost security and ensure the safe return of tourism in the long term.

5. Communication with the International Community:

   • The Indian government has communicated with international bodies, including the United Nations and global human rights organizations, to bring attention to Pakistan’s alleged role in sponsoring cross-border terrorism. India has demanded stronger international action to curb terrorism emanating from Pakistan.

   • The Indian leadership has called on the global community to put more pressure on Pakistan to dismantle terrorist networks operating within its borders.

Impact on India-Pakistan Relations

The Pahalgam terror attack has further strained the already tense relations between India and Pakistan. India views Pakistan as a state that has long harbored and supported terrorist organizations that target Indian civilians and military personnel. This attack has once again highlighted the unresolved conflict over Kashmir, which has been a point of contention between the two nations since their independence in 1947.

The immediate diplomatic fallout was severe. Pakistan, while denying any direct involvement, called for restraint and diplomacy but also condemned Indian retaliatory actions. India’s decision to suspend trade and close the border will further isolate Pakistan economically, as the bilateral trade between the two countries is estimated to be worth billions of dollars. This escalation has raised concerns in the international community about the potential for further military conflict in the region.

In response to international calls for de-escalation, Pakistan has reiterated its stance that it does not support terrorism, despite overwhelming evidence to the contrary. The involvement of Pakistani-based militant groups in the attack has reignited debates over Pakistan’s role in global terrorism and its failure to crack down on militant organizations within its borders.

Business Implications and Impact on the Indian Economy

1. Tourism Industry in Kashmir:

   • The Pahalgam terror attack has significantly impacted tourism in Jammu and Kashmir, with a sharp decline in both domestic and international visitors. The attack has raised serious safety concerns, leading many potential tourists to reconsider their travel plans.

   • In the aftermath of the attack, the Jammu and Kashmir Forest Department suspended all trekking activities to ensure the safety of tourists and locals. This decision disrupted the adventure tourism sector, which had been growing in popularity. With trekking activities halted, businesses that rely on adventure tourism, such as guides and local vendors, are facing significant financial losses.

2. Volatility in Stock Markets and Currency:

   • The Indian stock market witnessed a dip in investor confidence in the immediate aftermath of the attack, particularly in sectors like tourism, hospitality, and retail, which depend on regional stability.

   • The Indian rupee also faced downward pressure, trading at around 85.45 per USD. This was a direct result of investor concerns over the escalating tensions between India and Pakistan and the broader impact on regional security.

3. Potential Economic Sanctions and Trade Disruptions:

   • The suspension of the Indus Waters Treaty and the closure of the Wagah border could have significant ramifications for bilateral trade, particularly in industries like textiles, agriculture, and electronics. Cross-border trade worth billions of dollars has been suspended, affecting supply chains that stretch across both nations.

   • Indian exporters to Pakistan may face increased uncertainty and rising trade barriers, while Pakistan's trade deficit could worsen as a result of these actions.

4. Investment and Infrastructure Development:

   • The escalating tensions may deter foreign investments, especially in the region of Jammu and Kashmir, which has already been struggling to attract significant investment due to its proximity to conflict zones.

   • India’s emphasis on security and military preparedness could divert resources away from infrastructure projects in Kashmir, further delaying long-term economic development.

The Pahalgam terror attack marks a devastating moment in the ongoing conflict between India and Pakistan. India's prompt response underscores its commitment to protecting its citizens and national security, but it also highlights the complex and volatile relationship between the two countries. The attack’s aftermath will continue to affect both the diplomatic and economic landscapes, with profound implications for regional stability and business prospects. For India, the challenge will be balancing the need for security with the desire to foster economic growth and regional peace.

In the business world, companies will need to assess the risks and opportunities in this changing environment, as the consequences of the attack unfold both domestically and internationally.