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How traders in Pakistan are hit after India's customs duty hike

After the Pulwama attack, not only has India tried to stifle Pakistan by courting global support to declare it a terror monger, but the Modi government has also made efforts to cripple its economy by increasing duties on essential products.

twitter-logo BusinessToday.In   New Delhi     Last Updated: February 20, 2019  | 16:05 IST
How traders in Pakistan are hit after India's customs duty hike
India raised customs duty on the import of all Pakistani goods by over 200 per cent after the Pulwama terror attack. Photo: Reuters

Traders in Pakistan have been severely hit after India raised customs duty on the import of all Pakistani goods by over 200 per cent. Reports say, traders, especially those dealing in fresh fruits, cement, and cotton with India, have been affected as the high customs duty has almost put an end to the entire export activity with India. After the Pulwama attack, not only has India tried to stifle Pakistan by courting global support to declare it a terror monger, but the Modi government has also made efforts to cripple its economy by increasing duties on essential products. Pakistan's total exports with India stood at Rs 3,482.3 crore in 2017-18. The ripple effect of the customs duty hike will ultimately affect small traders who are staring a huge financial losses, say experts.

In fact, Indian cement importers have already cancelled orders placed with Pakistani traders. As per Pakistan-based daily Dawn, Indian importers have asked Pakistani cement exporters to recall containers after the customs duty hike. The daily quoted an exporter saying that around "600-800 containers loaded with cement" were stuck at Karachi Port, high seas or at Colombo and Dubai".

The cement traders in Pakistan are ruing over the rising tension between both the countries. Cement demand was at its peak in India after the Modi government announced Rs 5,000 crore rehabilitation projects for flood-hit Kerala.

Also read: 'You pick up a gun, you are dead': Indian Army says terrorists will be killed, blames Pakistan's ISI for Pulwama attack

Pakistan currently exports fruits ($112.8 million per year), cement ($78.3 million), chemicals ($60.4 million), fertilisers ($34.9 million), and leather and allied products to India. However, a larger look at trade activities between India and Pakistan reveals that import and export between India and Pakistan has been declining since 2014-15. Through the Attari-Wagah border alone, India's export has declined significantly from Rs 2,117 crore in 2014-15 to Rs 131 crore in 2018-19. The import, too, has seen a sharp fall from Rs 2,368 crore in 2014-15 to 721 crore in 2018-19. Pakistan allows the imports of as many as 138 items from India through the Wagah border.

Not only import, Indian traders have also stopped exporting their products to Pakistan. Tomato farmers in Petlawad tehsil of Jhabua district of MP have decided to stop tomato export to the neighbouring country. Apart from being an essential commodity, tomato is also a high-profit product for Pakistani traders. Reports suggest tomato exported from India fetch around three times profit in Pakistan. Once a major hub of tomato export to Pakistan, Petlawad's export to the country has declined sharply after the Uri attack in 2016.

Also read: Pulwama Attack: What is MFN? Why it means little in trade with Pakistan

Edited by Manoj Sharma

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