Pressure on Pakistan

The Rajya Sabha on Monday passed a statutory resolution enabling the government to levy 200 per cent duty on all goods that Pakistan exports to India, thus formalizing a notification issued by the Government of India in February this year immediately after the Pulwama terror attack. Some of the major items which Pakistan exports to India include lentils (mainly masur dal), fresh fruits, cement, petroleum products, minerals, leather, processed minerals, inorganic chemicals, raw cotton including waste, cotton fabrics, glass and glassware, boric acid, various reagents used in laboratories and for diagnostic purposes, etc. India occasionally also imports onion from Pakistan, especially when there is a sudden shortage. In 2015, for instance, India had imported 1,000 tonnes of onion, of which nearly 30 per cent was sourced in Pakistan. This increase in duty on items for which India is a major market for Pakistan, which actually began in February itself, has already had a crippling effect on one section of the Pakistani economy, with India trying to teach a lesson to the neighbour for its misdeeds, promoting and sponsoring terror against India being the most important. The drastic hike on the import duty on goods coming from Pakistan will isolate the unruly neighbouring in front of trade. Hiking of the duty at this level has already begun to hit exporters of Pakistan. Trade between the two countries has been quite huge despite the endless tension that exists between the two. The volume of India’s imports from Pakistan had increased to $488.5 billion in 2017-18 from $455.5 billion in 2016-17. Increase in the duty would drastically increase the prices of Pakistani goods in Indian markets, making them far less competitive compared to other imported goods. But while India can afford to import most of these items from other countries too, the Indian importers have already begun trade activities with new partners in countries other than Pakistan. Raising import duty to 200 per cent on the other hand effectively means almost imposing a ban on the imports from Pakistan. Taking a close look at India’s overall imports, the imports from Pakistan form a mere 0.31 per cent of India’s total trade with the world. Likewise, what Pakistan exports to India is only about 3.2 per cent of that country’s global trade. Despite that however India’s step would affect a sizeable number of traders and producers in Pakistan, which is enough to send a strong but also a symbolic signal as the two nations don’t really trade with each other much. Interestingly, Pakistan also maintains a negative list of as many as 1,209 products that cannot be imported from India. It also imposes high tariff on those goods and services that are allowed entry. Items that are banned from importing from India include textiles, garments, pharmaceuticals, plastic and polymer, cars, trucks and auto parts.