In the wake of dastardly attacks in Pulwama, the Indian government has been on a spree of retributions. After revoking the MFN status, the government in its latest move raised the customs duty to 200 percent on all goods imported from Pakistan, including products such as fresh fruits, cement, spices, wool, petroleum products, and mineral ore.
Union Finance Minister Arun Jaitley tweeted, “India has withdrawn MFN status to Pakistan after the Pulwama incident.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.”
India has withdrawn MFN status to Pakistan after the Pulwama incident.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
— Arun Jaitley (@arunjaitley) February 16, 2019
This decision is set to hit Pakistan’s exports to India badly, which stood at around Rs 3,482.3 crore in 2017-18. Imposing import duty of 200 percent would drastically increase the prices of Pakistani goods in the Indian market.
India on Friday revoked MFN status granted to Pakistan. The status had been granted to Pakistan two decades ago and the government is now setting things right.
The move to raise the customs duty will hurt the Pakistani economy which already is in a bad state. In the month of October last year, Pakistan Prime Minister Imran Khan on his desperate foreign tours begged for financial aid and bailouts. Imran Khan had embarked on a tour to Saudi Arabia to attend an investment conference boycotted by other leaders, on account of journalist Jamal Khashoggi’s death at the Saudi consulate in Istanbul, Turkey. At that time, Imran Khan had said in an interview before embarking on the tour that even he was concerned by Khashoggi’s death but Pakistan could not afford to skip this event because “we’re desperate” for possible Saudi loans to shore up Pakistan’s economy. Thus, Imran Khan had himself conceded that Pakistan was in a dire economic crunch on account of its desperation for loans. A balance of payment crisis looms large over the Pakistani economy and Imran Khan is expected to somehow save it from a probable breakdown.
It also came to light towards the end of last year that Pakistan’s currency had hit an all-time low to 144 rupees per dollar. The value of the Pakistani currency had moved southwards by 10 rupees within a day. Pakistani currency is therefore in very bad shape and this gives an idea of the kind of financial crisis that the terrorist state is battling. Other indicators of the Pakistani economy are also not in very encouraging shape. Last year, the Pakistani media had reported that the State Bank of Pakistan had witnessed a sharp decline in Foreign Exchange Reserves and it had hit a four-year low of $8.4 billion during the week ending September 28 last year. Moreover, in the month of January this year, it was reported that Pakistan’s Current Account Deficit had widened by 37% and had hit $1.66 billion in December 2018.
Therefore, India’s move to raise customs duty to 200% on imports from Pakistan has come at a time when the terrorist nation could least afford it. Now, the next possible move should be unilaterally withdrawing the Indus Water Treaty and show Pakistan that India is ready to step up the heat if Pakistan really seeks to escalate things.