India on Saturday, a day after withdrawing the 'Most Favoured Nation' (MFN) status granted to Pakistan in the wake of the Pulwama terror attack, hiked the basic customs duty on all goods imported from the neighbouring country to 200%. The decision to withdraw the status was taken soon after a convoy of CRPF vehicles was targeted by a Jaish-e-Mohammed (JeM) suicide bomber on the Jammu-Srinagar highway on Thursday, claiming the lives of over 40 CRPF jawans. At the same time, the government had also announced its plans to initiate diplomatic steps to ensure 'complete isolation' of Pakistan in the international community. "India has withdrawn MFN status to Pakistan after the Pulwama incident. Upon withdrawal, basic customs duty on all goods exported from Pakistan to India has been raised to 200% with immediate effect", tweeted Union Minister Arun Jaitley on Saturday evening.
The MFN status is given to a trade partner to ensure non-discriminatory trade between two countries. Although in the year 1996, India had granted the status to Pakistan and Islamabad did not reciprocate despite being required to do so as a member of the World Trade Organisation.
The Union government says that withdrawing the status will definitely hurt Pakistan as it is already struggling financially and bilateral trade between the two countries comes up to barely $2 billion a year. India mainly exports cotton, dyes, chemicals, vegetables and iron and steel to Pakistan while importing fruits, cement, leather, chemicals and spices. Global pressure is constantly building on Pakistan to act against perpetrators of the attack. Despite Chinese reservations, New Delhi has urged the international community to back the naming of JeM leader Masood Azhar as a "UN designated terrorist". The United States has also asked Pakistan to "immediately end support and safe haven to all terrorist groups".
Pakistan is already in the 'grey list' of the Financial Action Task Force (FATF) which is an inter-governmental body that works to stop terror financing, among other things. However, India wants it to be competely blacklisted. The FATF blacklist is meant for countries that are deemed "non-cooperative" in the global fight against money laundering and terror financing. If Pakistan is blacklisted by the FATF, it may lead to downgrading of the country by lenders like International Monetary Fund, World Bank, Asian Development Bank and the European Union.