Fragile Truce: The India-Pakistan Standoff Explored
Karun Gopal
Key Takeaways:
A fragile U.S.-brokered ceasefire halted a major escalation between India and Pakistan in May 2025, triggered by a sectarian militant attack in Kashmir that killed 26 civilians.
Core flashpoints remain unresolved: territorial disputes, cross-border militancy, and domestic political pressures continue to drive volatility and mutual hostility.
Both governments are weaponising media narratives to sustain nationalistic support, shaping domestic perceptions while avoiding full-scale conflict.
Pakistan faces acute economic fallout, including supply shortages, trade disruptions, and rising water insecurity due to India’s suspension of the Indus Water Treaty.
India remains more economically insulated, but investor sentiment and regional stability concerns may weigh on sensitive sectors and informal trade networks.
Overview
In late April 2025, a deadly militant attack in Indian-administered Kashmir sparked a sharp escalation in military strikes between India and Pakistan, with both sides engaging in cross-border missile and drone attacks. Tensions between India and Pakistan have followed a familiar and dangerous pattern in the past. In 2019, a suicide bombing in Pulwama killed 40 Indian paramilitary personnel. The attack was claimed by Jaish-e-Mohammed (JeM), a Pakistan-based militant group. In response, India launched airstrikes on Balakot in Pakistan’s Khyber Pakhtunkhwa province—the first across the Line of Control since 1971. Pakistan retaliated with airstrikes of its own, briefly escalating the conflict and capturing an Indian pilot. Though tensions eased soon after, India revoked Jammu and Kashmir’s special status in August 2019, reclassifying it as a union territory. The move sparked protests and drew international criticism.
That volatility resurfaced in late April, when a deadly militant attack in Indian-administered Kashmir triggered a sharp escalation. Both India and Pakistan carried out cross-border missile and drone strikes, suspended diplomatic ties, and exchanged heated rhetoric. On May 10, U.S. President Donald Trump announced a ceasefire, brokered by Washington, ending the immediate crisis. While the ceasefire has held, core issues remain unresolved and continue to threaten regional stability.
Trigger Points
India and Pakistan have long had a fraught relationship, marked by deep-seated mistrust, territorial disputes over Kashmir, and repeated outbreaks of violence. This latest escalation fits into that broader history, triggered by a brutal attack on 22 April in the town of Pahalgam, India-administered Jammu and Kashmir, where five militants from The Resistance Front (TRF) killed 26 tourists, most of them Hindu men. The attackers reportedly targeted victims unable to recite Quranic passages and referenced Indian Prime Minister Narendra Modi during the assault, underscoring the sectarian and political undertones of the incident.
In the aftermath of the attack, India pointed to TRF’s ties with Lashkar-e-Taiba (LeT), a Pakistan-based militant group, and accused Islamabad of enabling cross-border terrorism. This sparked a sharp deterioration in relations, with both countries expelling diplomats, suspending key diplomatic agreements, and entering their most serious crisis since 2019.
The Military & The Media
In reaction to the militant attack in Pahalgam, the Indian government commenced Operation Sindoor, targeting multiple locations along the Line of Control (LOC), Pakistan-administered Kashmir, and in Pakistani territory. Statements by the Indian government claim the strikes were conducted to target both JeM and LeT training facilities. No Pakistani military installations were believed to be targeted, with Islamabad claiming that the attacks only destroyed mosques and civilians. In reaction to Sindoor, Islamabad launched Operation Bunyan-un-Marsoos, targeting India’s technological infrastructure through a cyberattack and several Indian military bases using ballistic missiles. Online misinformation spread quickly following the attacks. India and Pakistan were accused of engaging in disinformation, with both states claiming far more casualties and damage than were later confirmed.
A notable similarity between the last two major escalations in 2019 and 2025 is the lack of territorial advancement and targeting of major cities. Despite reports from either side, media outside the two countries has confirmed that the territory exchanged during these two periods of conflict has been minimal. The conflict constantly follows a pattern of reciprocal strikes, avoiding major cities or installations. Due to heavy media censorship in both India and Pakistan, both sides can appease local, increasingly nationalistic, populations by claiming victories. This fractured media climate is becoming increasingly relevant. Independent journalists noted that while both countries have incurred losses, they severely overemphasised their successes. This may have assisted in bringing about a ceasefire, giving both India and Pakistan the chance to claim success without suffering major losses or altering their borders.
Threat of Nuclear Warfare
The threat of nuclear warfare has been a recurring topic in international discourse, especially since Pakistan’s successful nuclear tests in 1998. Both India and Pakistan have since expanded their arsenals—India with an estimated 172 nuclear warheads and Pakistan with around 170. Tensions, often sparked by events in Kashmir, regularly revive concerns of nuclear conflict. India maintains a No First Use policy, while Pakistan reserves the policy to use nuclear arms on the battlefield if faced with a stronger adversary.
Despite concerns, a direct nuclear exchange between India and Pakistan remains unlikely due to the logic of mutually assured destruction. With many of Pakistan’s major cities near the border, any strike could also impact Indian states like Gujarat, Punjab, and even the capital, New Delhi. As a result, nuclear weapons are largely used as tools of deterrence rather than active threats. This pattern continues today, just as it did in 2019 when Prime Minister Modi declared that India’s nuclear arsenal was "not kept for Diwali." Similarly, during this year’s skirmishes, Pakistani Defence Minister Khawaja Asif initially warned of a high nuclear threat before walking back his remarks. Still, concerns persist about conventional strikes on nuclear-linked facilities. For instance, during the latest clashes, Pakistan alleged that its installations near Kirana Hills were targeted—claims India denied. These developments likely contributed to Washington’s decision to intervene diplomatically.
Business Impact
Despite a formal trade freeze since 2019, India and Pakistan continue to engage in an estimated USD 10 billion in annual informal trade, primarily routed through third countries such as the UAE, Singapore, and Sri Lanka. Indian medications, plastics, and grains are diverted, rebranded, and marketed in Pakistan under new sources. Now, this grey market is in danger of collapsing. On 2 May, Pakistan initiated the prohibition of both direct commerce and imports through third nations. In response, India suspended its participation in the Indus Water Treaty, raising concerns for regions in Pakistan dependent on hydropower and agriculture.
These moves have strained Pakistan’s fragile economy. The pharmaceutical sector faces a supply crunch, as Indian generics form a key part of Pakistan’s pharmaceutical imports. With the closure of the Wagah-Attari border — the only open land trade route between India and Pakistan — overland trade from Afghanistan and beyond have been severely disrupted, straining the flow of goods such as dried fruit and contributing to price inflation in the region. Small businesses and logistics workers reliant on these corridors now face mounting financial pressure and uncertainty.
While India’s overall macroeconomic exposure is limited due to the scale and resilience of its economy, the recent escalation with Pakistan risks denting investor confidence, particularly in sectors reliant on regional stability. Informal exporters and border traders face disruptions, and customs authorities on both sides now confront the challenge of regulating a previously tolerated grey market. Demand for informal Indian goods remains strong in Pakistan, prompting traders to seek alternative routes despite mounting government pressure. Without a diplomatic resolution or trade formalisation, both economies stand to lose — though the immediate economic burden falls more heavily on Pakistan, which continues to grapple with currency volatility, surging import costs, and growing concerns over water security.
Projections
The 2025 standoff underscores how India-Pakistan relations remain dangerously prone to rapid escalation, particularly when sectarian violence or terrorist attacks are involved. While the U.S.-brokered ceasefire has restored a tense calm, the conditions that led to this year’s crisis—Kashmir, cross-border militancy, and nationalistic political pressures—remain unresolved. As such, the ceasefire should be viewed as a temporary pause rather than a durable peace.
In the short to medium term, relations are likely to remain cold, characterised by limited diplomatic engagement, economic decoupling, and continued military posturing. The suspension of the Indus Water Treaty is likely to face international scrutiny and be a major point of contention going forward. If not reversed, this move could deepen water insecurity in Pakistan and further entrench mistrust.
Both governments are expected to continue weaponising public narratives and media control to sustain domestic support. Mutual deterrence will likely limit the scale of future military exchanges, but the risk of miscalculation—especially in the fog of cyber conflict and disinformation—remains high. Neither side has shown an appetite for territorial gains, reinforcing the trend of “managed escalation,” where symbolic strikes substitute for prolonged warfare. In the absence of sustained diplomatic initiatives, Kashmir will remain a flashpoint. Further provocations—especially high-casualty militant attacks with alleged Pakistani links—could trigger another round of strikes.
Barring a significant diplomatic breakthrough or third-party mediation, the India-Pakistan relationship is likely to remain in a state of armed truce—avoiding all-out war but with recurrent cycles of tension, nationalist rhetoric, and low-level conflict. The most plausible scenario is one of continued strategic hostility marked by episodic flare-ups and deepening disengagement across trade, diplomacy, and water-sharing agreements.