MFN Status Withdrawal by India – Will it Hurt Pakistan?

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India and Pakistan – the rivalry continues unresolved since their birth as two independent nations.

India has shown respect, integrity, and friendship to all its neighbours including Pakistan.

But, Pakistan favoured terrorism continues to hit the bilateral relations between the two countries.

Does Pakistan deserve respect from India and other countries?

On 14th February, Pakistan-based terror outfit Jaish-e-Mohammad attacked CRPF jawans at Pulwama, Kashmir.

42 The CRPF personnel were martyred in this heinous suicide bomber attack.

India has withdrawn MFN (Most Favoured Nation) status to Pakistan after the Pulwama incident.

India hit back by hiking customs duty on all goods imported from Pakistan by 200% with immediate effect.

With MFN status, the recipient country would nominally receive equal trade advantages (low tariffs or high import quotas) by the granting country.

Will this move hurt Pakistan?

Let’s take a look.

The two main items imported from Pakistan are fruits and cement.

Current customs duty on fruits is 30-50% and for cement, it is 7.5%.

Slapping an import duty of 200% effectively means almost banning the imports from Pakistan.

But, India’s trade numbers with Pakistan are minuscule.

According to a World Bank report,

The current level of trade between Pakistan and India is valued at a little over $2 billion.

But, the capacity is as high as $37 billion.

There are hardly any strong trade ties between the two neighbouring countries.

Although India had granted the MFN status to Pakistan in 1996, the latter had not reciprocated.

Revoking MFN status won’t have any significant trade fallout.

The move by the government has more of symbolic value than any actual impact.

Jai Hind…

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