Pulwama attack: India revokes MFN status to Pakistan

Revoking MFN status will affect trade relations with Pakistan

arun-jaitley-health-reuters [File] Finance Minister Arun Jaitley | Reuters

Following the Pulwama terror attack, India on Friday withdrew the 'most-favoured nation' status to Pakistan, a move which would enable India to increase customs duty on goods coming from the neighbouring country.

In a media briefing after the meeting of the Cabinet Committee on Security (CCS), Finance Minister Arun Jaitley said the most-favoured nation (MFN) status to Pakistan stands revoked.

India granted the MFN status to Pakistan way back in in 1996, but the neighbouring country has not yet reciprocated.

The MFN status was accorded under WTO's General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to this; and are members of the World Trade Organisation (WTO), which means they have to treat each other and the other WTO member countries as favoured trading partners in terms of imposing customs duties on goods.

Removal of this status means India can now enhance customs duties to any level on goods coming from Pakistan, a trade expert said.

Total India-Pakistan trade has increased marginally to $2.41 billion in 2017-18 as against $2.27 billion in 2016-17. India imported goods worth $488.5 million in 2017-18 and exported goods worth $1.92 billion in that fiscal.

Under MFN pact, a WTO member country is obliged to treat the other trading nation in a non-discriminatory manner, especially with regard to customs duty and other levies.

India mainly exports cotton, dyes, chemicals, vegetables and iron and steel; while it imports fruits, cement, leather, chemicals and spices.

The CCS meet was chaired by Prime Minister Narendra Modi to discuss the security scenario in Jammu and Kashmir in the wake of the Pulwama terror attack.

At least 37 CRPF personnel were killed and five injured on Thursday in one of the deadliest terror attacks in Jammu and Kashmir when a Jaish suicide bomber rammed a vehicle carrying over 100 kg of explosives into their bus in Pulwama district.