India revoked its most favoured status to Pakistan on Friday.
The move comes a day after 40 Indian soldiers were killed in a terror attack in Indian-Administered Kashmir.
Indian Finance Minister Arun Jaitley announced the decision while briefing the media in Delhi, reported NDTV.
He said that India will take all diplomatic steps to ensure complete isolation of Pakistan in the international community.
Jaitley said that those helping and supporting terrorists will “pay a very heavy price.”
Most favoured nation status is given a trade partner to ensure non-discriminator trade between the two countries.
Indian granted Pakistan the status in 1996.
Both India and Pakistan are signatories to the WTO’s General Agreement on Tariffs and Trade, which means they have to treat each other and other WTO member countries as favoured trading partners in terms of custom duties