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Article 370 impact: Pakistan formally suspends trade with India

Pakistan downgrades India trade relations to the level of Israel

Imran Khan (left) and Narendra Modi

In retaliation to India's scrapping of special status to Jammu and Kashmir, Pakistan on Friday has formally decided to end all trade relations with its perennial foe. Pakistan formally downgraded its trade relations with India to the level of Israel with which Islamabad has no trade ties at all, reported Dawn on Saturday.

Pakistan had on Wednesday decided to downgrade diplomatic relations with India and suspended bilateral trade in the wake of New Delhi's "unilateral and illegal" move to revoke the special status of Jammu and Kashmir. 

Following this, the federal cabinet headed by Prime Minister Imran Khan on Friday endorsed the decisions taken by the National Security Committee and the joint session of parliament, which include suspension of trade ties with India. As a result, all kind of exports to India have been suspended by amending the Export Policy Order 2016.

A government spokesperson, Firdous Ashiq Awan, added that Pakistan had also suspended import of Indian goods by amending the Import Policy Order 2016. Earlier, this ban was only limited to imports from Israel. 

Experts had then suggested that Pakistan's decision to suspend bilateral trade ties with India would hit the neighbouring country more as they import essential items. Trade relations between India and Pakistan were already strained following the Pulwama terror attack as India imposed 200 per cent customs duty on all goods imported from the neighbouring nation. 

India's export basket for Pakistan has a limited portfolio as Pakistan has not given 'most favoured nation' status to New Delhi and such goods have ready market in South Asia and the Middle East.

Imports from Pakistan declined by 92 per cent to $2.84 million in March this year compared to $34.61 million in March 2018, according to the commerce ministry data. India imported goods such as cotton, fresh fruits, cement, petroleum products and mineral ore from Pakistan.

During January-March period of 2018-19 fiscal, imports from Pakistan declined by 47 per cent to $53.65 million. India's exports to Pakistan, too, have dipped by about 32 per cent to $171.34 million in March. However, exports had increased by 7.4 per cent to $2 billion during 2018-19.

The main products being exported by India include organic chemicals; cotton; nuclear reactors, boilers; plastic products; tanning or dyeing extracts; cereals; sugar; coffee, tea; articles of iron and steel; copper and footwear.

India had also revoked the MFN (most favoured nation) status to Pakistan in the aftermath of the terror attack. The country has repealed a security exception clause of the World Trade Organisation (WTO) to withdraw this status. Both the countries are member of this body.

India can also restrict trade of certain goods and impose port-related restrictions on Pakistani goods.

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

Under the 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.