Chennai: No sooner had India abrogated 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, Pakistan decided to suspend bilateral trade ties with its neighbour.
However, Industry experts are of the belief that such a move would hit Pakistan severely as it imports essential items like onion, tomotoes and chemicals, from India.
“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 said.
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 it was a ‘very sad’ development. He said the decision of Pakistan would further impact trade ties between the countries.
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.
India had also revoked the most favoured nation (MFN) 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 The country has repealed a security exception clause of the World Trade Organisation (WTO) to withdraw this status.
India had granted the MFN status to Pakistan 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.
Pakistan depends on products being exported by India such as organic chemicals, cotton, nuclear reactors, boilers, plastic products, tanning or dyeing extracts, cereals, sugar, coffee, tea, articles of iron and steel, copper and footwear.
|Import & Export|
|According to reports, the trade potential between the two countries is estimated to be $37 billion.
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.