India's decision to extend "Most Favoured Nation" status to Pakistan in 1996 was never reciprocated.

Highlights Union Minister Arun Jaitley in a tweet referred to hike in customs duty

India withdrew 'Most Favoured Nation' status for Pakistan on Friday

MFN status is given to a trade partner to ensure non-discriminatory trade

A day after withdrawing the 'Most Favoured Nation' (MFN) status granted to Pakistan in the wake of the Pulwama terror attack, India on Saturday 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, resulting in over 40 deaths. At the same time, the government also announced its plans to initiate diplomatic steps to ensure the 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"India has withdrawn MFN status to Pakistan after the Pulwama incident.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," Union Minister Arun Jaitley tweeted on Saturday evening.

The MFN status is given to a trade partner to ensure non-discriminatory trade between two countries. Although India had granted the status to Pakistan in 1996, Islamabad did not reciprocate despite it being required to do so as a member of the World Trade Organisation.

India has withdrawn MFN status to Pakistan after the Pulwama incident.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. #Pulwama - Arun Jaitley (@arunjaitley) February 16, 2019

Although the Union government says that withdrawing the status will hurt Pakistan at a time when it is struggling financially, the move is mostly symbolic because 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.

Meanwhile, global pressure is 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), 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 the FATF blacklists Pakistan, it may lead to downgrading of the country by lenders like International Monetary Fund, World Bank, Asian Development Bank and the European Union.

(With inputs from ANI)