Imports from Pakistan to India decline by 92% in March 2019

Imports from Pakistan to India have declined by 92% amounting to USD 2.84 Million in March 2019 after imposition of 200% customs duties on all products. The strong economic action against Pakistan was taken following Pulwama terror attack.

Key Highlights

  • Background: On February 2019, in aftermath of Pulwama terror attack for which Pakistan based JeM terror group claimed responsibility, India revoked the MFN (Most Favoured Nation) status given to Pakistan. This further led to strong economic action against Pakistan such as India raised customs duty to 200% on all goods imported from Pakistan.
  • During 2018-19 fiscal year for January-March period, the imports from Pakistan declined by 47%, about USD 53.65 Million.
  • India’s Export: In March 2019, India’s exports to Pakistan also dipped by about 32% amounting to over USD171 million. However, Indian exports grew by 7.4% (over USD 2 billion) during 2018-19.
  • Commodities Imported: India raised 200% custom duty on goods imported from neighbouring country, including cotton, fresh fruits, cement, petroleum products and mineral. But the main commodities imported during month of March 2019 from Pakistan includes knitted fabrics, wool, articles of apparel and clothing, preparation of vegetables spices, chemicals, man-made filaments, and plastics.
  • Exception: As per some experts, keeping in mind that importing goods at 200% customs duties would not be viable for anyone, thus government has allowed few domestic manufacturing exporters to avail Nil(0%) import duty benefit under Advance Authorisation Scheme to import products, especially raw materials from Pakistan.

About Most Favoured Nation Status

  • Under the MFN pact, a World Trade Organisation (WTO) member country is obliged to treat other trading nation (to whom it has granted MFN status) in a non-discriminatory manner, especially with regard to customs duty and other levies.
  • The MFN status was granted by India to Pakistan in 1996, but India was not granted the same from Pakistan.

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