Pakistan officially suspends trade with India: Which nation will it hurt more
New Delhi, Aug 10: Pakistan, has now formally suspended its trade relations with India. Pakistan, it may be recalled had announced that it would be suspending bi-lateral trade with India after a decision to scrap Article 370 was taken.
The relations between the two countries were already strained after the Pulwama attack. India had imposed 200 per cent customs duty on all goods imported from Pakistan, following which imports declined by 92 per cent.
The question is will this decision to suspend trade relations hurt India or Pakistan more.
"The suspension of trade relations will hit Pakistan more badly as India is less dependent on Pakistan while the latter is more," Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai had told PTI.
India's export basket to the neighbour consists of limited products 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, he said.
Vikramjit Singh Sahney, President, International Chamber of Commerce (ICC) - India said that it was a 'very sad' development.
He said that the decision of Pakistan would further impact trade ties between the countries.
Professor at Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said that Pakistan's decision is going to impact its businesses.
Professor Biswajit Dhar of Jawaharlal Nehru University too said that both in long and short term, Pakistan would be impacted from their decision as they also import basic agri-commodities like onion and tomatoes.
India on Monday abolished Article 370 of the Constitution that gave special status to Jammu and Kashmir and bifurcated the state into two Union Territories - Jammu and Kashmir, and Ladakh.
Trade relations between India and Pakistan were already strained following the Pulwama terror attack in February as India imposed 200 per cent customs duty on all goods imported from the neighbouring nation.
While India's exports to Pakistan stood at $2 billion, imports were about $500 million per year. 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 April-June this fiscal, imports stood at to $7.13 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.
During April-June this fiscal, India's exports stood at $314.7 million. 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 members 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.