India withdraws Most Favoured Nation status accorded to Pakistan

India on 15 February 2019 withdrew the ‘Most-Favoured Nation’ status accorded to Pakistan following the Pulwama terror attack in Jammu and Kashmir that led to the killing of 37 CRPF personnel and injuring of many others.

The decision was taken during a meeting of the Cabinet Committee on Security, which was presided over by Prime Minister Narendra Modi to discuss the security scenario in Jammu and Kashmir in the wake of the terror attack. During a press meet after the meeting, Finance Minister Arun Jaitley said all the required efforts will be made to ensure that perpetrators of the heinous attack are brought to book and made to pay a heavy price.

Key Highlights:-

1. Pakistan exported just $500 million of goods in 2017-18 to India, representing 1.5 percent of its exports. However, it is believed to have exported goods worth about 3-4 times as much through third countries.
2. India on 16 February 2019 increased customs duty on all goods originating from or imported from Pakistan to 200 percent with immediate effect.
3. While the official trade between the two neighbors in 2017-18 stood at $2.4 billion, the third-country trade between the two is estimated to have been $5-10 billion.
4. It is not very clear whether this will affect the third-country trade which is going on between the two countries through places such as Dubai in the UAE and Singapore.
5. The main items imported by India from Pakistan include fresh fruits, cement, petroleum products, bulk minerals and ores, and finished leather.
6. According to analysts, the hike in the excise duty could hit cement and bituminous oil export by Pakistan as these are bulk commodities which are difficult to ship through third countries without impacting the costing hugely.

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