India withdraws Most Favoured Nation status to Pakistan

The Prime Minister, Shri Narendra Modi chairing the meeting of the Cabinet Council of Security, at Lok Kalyan Marg, in New Delhi on February 15, 2019.

Following the Pulwama terror attack, India today 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.

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. It was attended by Defence Minister Nirmala Sitharaman, Home Mnister Rajnath Singh, External Affairs Minister Sushma Swaraj and Finance Minister Arun Jaitley, among others.

As per sources, India has decided to prepare a dossier to prove Pakistan’s link in the attack. Meanwhile, the Ministry of External Affairs has called for terror outfit Jaish-e-Mohammed’s leader Masood Azhar to be branded as a ‘designated terrorist’ by the UN under its provisions. It says, “The Government of India condemns in the strongest possible terms the cowardly terrorist attack on our brave security forces in Pulwama”.

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 USD 2.41 billion in 2017-18 as against USD 2.27 billion in 2016-17. India imported goods worth USD 488.5 million in 2017-18 and exported goods worth USD 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.

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