India’s retaliation to Pakistan’s cowardly attack that left more than 40 CRPF jawans martyred in Jammu & Kashmir’s Pulwama district has begun on the economic front. Finance Minister Arun Jaitley’s first plan of action upon return to India from the US after receiving medical treatment was to withdraw the “Most Favoured Nation” (MFN) tag to Pakistan that was granted in 1996 treating it as a fellow WTO member and granting it favourable trading privileges. In spite of India granting the most favoured nation status to Pakistan way back in 1996, Islamabad has not reciprocated the favour and in 2012 Pakistan had committed to giving the MFN status to India, but later retracted due to domestic opposition.
In line with the recent withdrawal of the most favoured nation tag to Pakistan, the Union Government has hiked customs duty on all goods imported from Pakistan to 200% with immediate effect.
Increasing the customs duty on imported goods would hit the already ailing economy of Pakistan further, with exports worth 488.5 million $ (around 3,482 crore ₹) from Pakistan being affected.
The main items which Pakistan exports to India include fresh fruits, cement, petroleum products, minerals and ores and finished leather. The two main items imported is fruits which currently has a customs duty of 30-50% and cement which has 7.5% duty. Slapping an import duty of 200% effectively means almost banning the imports from Pakistan, which will definitely pinch Islamabad who’s economy is faltering so bad that they were given an emergency loan by Saudi Arabia of 6 billion $ last year to keep its economy afloat. The total India-Pakistan trade stood at 2.27 billion $ in 2017-18.
However, a rather worrying development is Saudi Arabia’s affinity for its fellow Muslim nation of Pakistan. Saudi Crown prince Mohammed Bin Salman on a visit on Sunday to Pakistan has pledged investment deals worth 20 billion $ to help out its fragile economy which is desperate for cash. The most disturbing bit came when the Crown Prince was quoted saying “Saudi cannot say no to Pakistan, whatever you want we will do”. The Crown Prince is due next for a visit to India very soon; hopefully Modi and team can educate him on how much of his investment is expected to be used for legitimate purposes and how much for terror funding.
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