InvestorQ : What impact will hiking the customs duty have on Pakistan economy?
priya Shah made post

What impact will hiking the customs duty have on Pakistan economy?

user profile image
1 year ago

The striking off of the Most Favoured Nation (MFN) status by India has caused the hiking of the customs duty to 200% on goods imported by Pakistan. What this will imply is that importing of any commodities or finished goods from Pakistan will become difficult or more expensive to merchants in India.

Since the move is more affecting the duty on from the Indian side, it will have a larger implication on India than on Pakistan as Pakistan did not have a MFN status for India. If an Indian merchant was buying say dryfruits or cement and his options were to get them from Iran or Pakistan, there might have been a possibility that it used to be economical to get them from Pakistan. Now with the duty higher, the merchant may have to look at Iran alone now. So the cost of the commodity may go a bit higher.

This will have an indirect impact on Pakistan as a big market of India will be not competitive of their goods with the trade concessions no longer in place. Their economy will have an impact until they find another market for these goods.

user profile image
Pratik vyas answered.
1 year ago

Indian government on Saturday imposed 200 percent customs duty hike on the import of Pakistani goods. This was in response to the Pulwama terror attack that killed 40 CRPF personnel on Thursday.

This hike will increase the prices of Pakistani goods in Indian markets significantly, which will make them far less competitive vis-à-vis imported products from other nations.

Reports say the move will significantly hit Pakistan’s exports to India, which were $381 million in April-November compared with $489 million in all of FY18. India majorly imports fruits and nuts, gypsum, sulphur, finished leather, ores, mineral oils and cement.