Cement Industry is happy as MFN status to Pakistan Withdrawn
19, Feb 2019
Prelims level : Economy Mains level : Changes in industrial policy and their effects on industrial growth.
- Cement manufacturers are happy after India decided to withdraw most favoured nation (MFN) status to Pakistan and also slap 200% duty on imports from that country in the wake of the Pulwama terror attack.
- This move would impact USD 488.5 million worth of goods that Pakistan exports to India.
- India granted the MFN status to Pakistan way back in in 1996. The MFN status was accorded under World Trade Organization’s (WTO) General Agreement on Tariffs and Trade (GATT).
- One of the major items of import from Pakistan is cement and the Centre’s action would erase the price advantage that the neighbouring country had enjoyed for quite some years.
- Cement industry sources had estimated imports from Pakistan in the range of 40,000 to 50,000 tonnes annually. With Islamabad enjoying the MFN status (now withdrawn), Pakistani cement enjoyed a price advantage of almost Rs. 100 for a bag of 50 kg.
- According to top industry sources, Thoothukudi and Kochi ports have been the access points for import of cement from Pakistan.
- Compared with the India-made cement, it ranks very low in quality
- And also, allowing import of cement from Pakistan at a subsidized rate when the Indian firms have built up huge capacity, goes against the Make-in-India concept
- A combination of factors, including imports from Pakistan, has seen a general sluggishness in cement demand. Not surprisingly, the demand sluggishness, especially in the south, has hurt the cause of the cement industry.
- Concerns over cement imports from Pakistan had often be articulated to the authorities in the past from competition as well security perspective. The economic action against Islamabad in the wake of terrorist attack in Pulwama, would address the twin concerns of security and quality of cement imports from that country
Most Favoured Nation (MFN):
According to WTO, Most-favoured-nation (MFN) status is all about treating other people equally. Under the WTO agreements, countries cannot normally discriminate between their trading partners. In the WTO, MFN Status means non-discrimination i.e. treating virtually everyone equally. As per WTO website, “Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.” – This principle is known as most-favoured-nation (MFN) treatment, according to WTO.