After Pulwama attack, India hikes customs duty to 200% on all goods imported from Pakistan

Day after announcing that it is withdrawing most favoured nation (MFN) status to Pakistan on the backdrop of the Pulwama terror attack, India on Saturday increased duties on imports from Pakistan to 200%.

“India has withdrawn MFN status to Pakistan after the Pulwama incident. Upon withdrawal, basic customs duty on all goods exported from Pakistan to India has been raised to 200% with immediate effect,” finance minister Arun Jaitley tweeted.

The Department of Revenue in a notification said the central government is satisfied that the import duty leviable on all goods originating in or exported from the Islamic Republic of Pakistan should be increased and that circumstances exist which render it necessary to take immediate action.

Total trade between the two South Asian neighbours increased by 6% in 2017-18 to $2.4 billion, with $1.9 billion exports and $500 million imports from Pakistan. At present most of the trade between India and Pakistan is routed through either the United Arab Emirates or Singapore to the tune of $3 billion because of trade restrictions put by Pakistan. Trade diversion is likely to increase after withdrawal of the MFN status. Trade between India and Pakistan can increase to $37 billion if both countries do away with artificial trade barriers, a World Bank report said in September last year.

The Dawn newspaper reported on Friday that Pakistan is currently studying all options including further expanding the negative list of items of 1209 products currently it does not allow India to export to Pakistan.