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As you are aware that more than 40 Central Reserve Police Force (CRPF) jawans have killed last week in the Pulwama district of Jammu & Kashmir (J&K)[1]. It is considered as one of the worst terrorist attacks in the last several years. On this attack, strategic analysts are debating for all the possible options in terms of taking revenge from such terrorist communities to reinstate the faith of the general public. However, every political or economic move made by the government has long term impact; but still, it cannot recover the cost of loss of lives.
Now, Indian people want the government to punish perpetrators even if it means carrying out surgical strike across the border. Therefore to give a reply to the terrorist communities the Indian government has taken some significant steps. Let’s have a look at all these steps in detail;
The following measures are in process on the immediate basis after the Pulwama Attack:
While the withdrawal of the MFN status by India is detrimental in sentiment terms for the bilateral relations. The impact on trade is unlikely to be substantial given that volumes of merchandise trade are low.
Also, Read: Impact of 2019 Elections on Indian Economic Sector.
The MFN provision, given in Article I of the General Agreement on Tariffs and Trade (GATT) is a principle of non-discrimination, which prohibits WTO member countries from discriminating between their trading partners subject to certain exceptions. It obligates all WTO member countries to treat all other member countries equally as ‘most favored’ trading partners.
India has been honoring its MFN obligation towards Pakistan since 1996, i.e., after the formation of the WTO. However, Pakistan has not done so.
The following significant developments were taken on February 17th, 2019
Nearly 5000 farmers, engaged in tomato cultivation, have supported the decision of the community to mark their protest against the Pulwama Attack that claimed the lives of at least 40 soldiers.
According to Tomato Trade Association’s president Ashok Kaushik, the market sends 75-100 trucks of tomatoes to Pakistan. The mandi has also decided not to send any products to Pakistan. Currently, tomatoes in India are selling at Rs 10 per kg while in Lahore the prices have skyrocketed to Rs 180 per kg, according to a journalist who’s covering the South Asia region
Pakistan will no longer enjoy rebates on the tariff, freer markets and a free flow of goods that come with the Most DFMFN status. These bonuses are helpful for the participating countries as they give local products broader access to markets, but it may also cause price wars and make domestic industries weak.
Data suggest the bilateral trade between India and Pakistan increases to $2.41 billion in 2017-18 as compared to $2.27 billion in 2016-17 with India being a net exporter of goods worth $1.92 billion in FY17. Pakistan exported products worth $488.5 million in 2017-18.
However, the trade potential between India and Pakistan are much higher than the existing trade between the two nations. A World Bank report in September last year highlighted that commerce between India and Pakistan could grow up to USD 37 billion. It can only be if both countries eliminate artificial trade barriers.
While looking at the past, India has a total of 4 wars with Pakistan. But, India never reacted in such a violent manner before. It will be challenging for Indian political regime to unite and respond with a robust planned strategy without hitting the Indian economy badly.
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