Less than two weeks after India raised the basic customs duty on all items imported from Pakistan to 200%, the effects of the same have already started to show. The duty hike was enforced after India had withdrawn the Most Favoured Nation accorded to Pakistan following the Pulwama terror attack.
An import duty of 200%, along with other duties such as Countervailing Duty and Special Countervailing Duty, has meant that items imported from Pakistan will cost 300% or more than its basic price, making than completely uncompetitive in the Indian market. As a result, traders in India have refused to import goods from Pakistan.
This has resulted in a long queue of hundreds of trucks carrying goods from Pakistan to India at the border, as naturally, nobody is willing to pay 200% or more tax to clear the shipments to India. Trucks carrying various items like cement, granite, gypsum, dry dates, graphite etc are stranded at the Attari-Wagah border, as Indian importers have refused to accept them.
As trucks are stranded in the border for almost 10 days now, some truckers have started to offload the consignments at the border itself and return from the border. As there is confusion and uncertainty over whether Indian importers will accept the shipments, and the transporters can’t keep their loaded trucks at the border forever. Items like granite and gypsum have offloaded on the sides of the roads, but other items like cement are still kept in trucks as they can’t be stored in open. Most exporters are also not willing to take back the goods, resulting them to be stranded at the border.
Although Pakistani exports will suffer for the raised import duty by India in the long run, Indian traders have suffered for the time being due to the goods languishing at the Attari-Wagah border. Because, Indian importers have already paid for most of the shipments, but now they have to pay 200% or more import duty to take delivery of the same. If they are unable to clear the shipments, they stand to lose the money already paid to Pakistani exporters.
Due to this, the Indian importers have demanded that the shipments which are already at the border, and for which payments have already been made, should be cleared with old import duty. They say that the bill-of-entry for most of the consignments were filed before the hike in duty, that’s why ideally the new duty should not apply on them. The traders are planning to move the Supreme Court if the customs department does not agree with their demand.
Pakistan’s import from India is much more than India’s import from Pakistan. So far, Pakistan has not announced any retaliatory hike in customs duty on imports from India, and exports to Pakistan is continuing. Pakistan has not accorded India the MFN status so they are free to increase the duties if they want.