NEW DELHI: The recent military escalation between India and Pakistan has resulted in a severe economic and strategic setback for India, with total estimated losses surpassing USD 103 billion.
The failed ‘Operation Sindoor’ that began as a high-stakes show of strength quickly turned into a costly miscalculation, exposing critical vulnerabilities in India’s economic and diplomatic posture.
The Indian government incurred approximately USD 10 billion in military logistics and operational expenses during the standoff, while the loss of several high-value aircrafts, worth USD 2.4 billion, highlighted gaps in air defense and combat readiness. However, the broader damage extended well beyond the battlefield.
Pakistan’s closure of its airspace in response to the conflict grounded over 2,000 Indian commercial flights, resulting in losses of nearly USD 600 million to the aviation sector. The disruption triggered emergency bailouts for struggling airlines and intensified domestic criticism over the lack of contingency planning.
Investor confidence also took a major hit. Foreign institutional investors pulled out an estimated USD 20 billion from Indian markets during the peak of the crisis, prompting the Reserve Bank of India to step in with emergency measures to stabilize the rupee and bond yields.
Trade between India and Pakistan came to a halt, with the brunt of the damage felt in Border States such as Punjab, Gujarat, and Rajasthan. Suspended infrastructure and regional trade contracts accounted for another USD 25 billion in damages, further widening the economic fallout.
Meanwhile, the strategic exposure of India’s economic heartlands became a cause for concern. Analysts noted that Gujarat’s key facilities such as Mundra Port which plays a vital role in India’s exports could bring long-term consequences for trade and supply chains.
