18 Feb 2019Posted By: Mudit Handa


India imposes 200% Customs Duty on Imports from Pakistan

India has recently witnessed a cowardly terror attack in Pulwama. The whole nation is grieved with the decease of 44 Jawans in the Pulwama region of J&K. The entire atmosphere is heated up due to the sad demise of CRPF jawans and constant demand from the agitated citizens for a concrete action to end terrorism.

The Indian government has started off with some noteworthy restrictive diplomatic measures against the neighbouring country. The most significant action taken by the Government is that customs duty on all imports from Pakistan has been sharply raised to 200%.

This is a primary diplomatic measure taken in order to ban the imports from Pakistan.

Here is the  

 

#1. How will it affect the Pakistan economy?

There’s no doubt that this is a significant step taken by the Government to alarm the neighbouring country.

  • The sharp increase in the basic customs duty will now pressurize the Pak Economy.

  • This would hugely impact exports from Pakistan to India.

  • In FY 2017-18, Pak exports to India stood above ₹3,482 crores.

  • The current decision to double the customs duty will soon decline the exports from Pakistan.

  • This will now put additional pressure on the debt-trapped Pak Economy.

 

#2. How will it affect the Indian market?

Due to the free trade between 2 nations, India was hitherto importing several commodities from Pakistan. Currently, India imports certain varieties of fresh fruits, cement, petroleum products and mineral ore from Pak.

  • Now, the rise in customs duty will also slightly impact the Indian market.

  • Presently, the customs duty on fruits is 30-50% and on cement is 7.5%.

  • 200% increase in the customs duty will now shoot up the prices of such goods.

  • Indian consumers must not panic and be prepared for this situation.

However, this would compel the government for indigenous production and export promotion. Indian farmers who are growing fruits and having Import Export code should now increase their cultivation, besides expand their supply overseas.

 

#3. What is the solution to such a problem?

There’s nothing to worry about! India can easily overcome this situation with patience and smart consumption.

  • Consumers can easily substitute imported commodities with Indian goods.

  • India can now focus on the production of cement & petroleum goods to fill the gap.

  • Moreover, import substitution & in-house production will further boost the Indian economy.

  • The Indian manufacturer should now focus on in-house production. Those having the unique Import Export code should now export finished goods and expand their business globally.

 

#4. How will this benefit India?

On the other side, if we see, the restrictive trade policies are beneficial for India.

  • India will now have a chance to boost the native industry.

  • According to experts, India has immense production capacity in cement sector (116 million tonnes) lying untapped.

  • Now, if this capacity is smartly utilized, India can even become a huge exporter of Cement to the world.

  • The cement manufacturers having Import Export code should hence focus on in-house production and global expansion of their business.

#5. What are other strict measures on Pakistan?

Other restrictive trade policies implemented by India are as follows-

  • India has striped Pakistan off the Most Favored Nation (MFN) status.

  • MFN status was granted to Pakistan by India in 1996.

  • MFN status ensures free trade between 2 nations.

  • End of MFN status will mean restricted trade between India & Pak.

  • This will diplomatically isolate Pakistan.

 

#6. What other strict measures can be taken against Pakistan?

Besides, many other punitive actions against the terror-funding neighbouring country are likely to be taken.

  • At the Financial Action Task Force (FATF) plenary meeting, which is scheduled to be held from 17th to 22nd February 2019 in Paris, India will compel European Commission to blacklist Pakistan.
  • Blacklisted countries are those that are "Non-Cooperative Countries or Territories" (NCCTs). Countries that are involved in foul practices such as money laundering and terror-funding are placed under blacklist.
  • Such nations are denied financial aid, and face numerous trade restrictions and economic sanctions.
  • Moreover, this will mean that all Indian exporters having Import Export code shall issue a blacklist certificate to assure that their consignment doesn’t enter the Pakistan ports.
  • Currently, Pakistan is placed under the Grey list, which means it can be downgraded to blacklist anytime, if it violates the protocols of FTAF.

You can also refer to the 

With that, we salute our Indian Jawans…. Jai Hind!

 

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