India on Saturday hiked the customs duty on all goods imported from Pakistan to 200% with immediate effect, a day after it revoked the most favoured nation (MFN) status that it had given its neighbour in 1996. “India has withdrawn MFN status to Pakistan after the Pulwama incident.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. #Pulwama,” finance minister Arun Jaitley tweeted on Saturday.
The punitive action has followed the Pulwama terrorist attack that killed about 40 Central Reserve Police Force (CRPF) personnel on Thursday. “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,” the government said in a notification. The move is likely to hit Pakistan’s exports to India which were $381 million in the April-November period compared with $489 million in all of FY18. India’s major imports are fruits and nuts, gypsum, sulphur, finished leather, ores, mineral oils and cement. The new tariff of 200% is higher than India’s average bound rate for agricultural products of 113.5% and that for non-farm goods of 34.6%. The MFN applied rates are 32.8% and 10.7%, respectively for farm and non-farm products.
India’s move is in accordance with its domestic Foreign Trade (Development And Regulation) Act that allows it to prohibit, restrict or regulate the import or export of goods. It also conform to the global trade norms which do not require any country to furnish any information the disclosure of which it considers contrary to its essential security interests and allow countries any action which they consider necessary for the protection of their essential security interests.