Pak grants MFN status to India

Almost 15 years after India granted the ‘Most Favoured Nation’ status to Pakistan, the latter has reciprocated. Pakistan accorded the status to India today. The move will liberalise bilateral trade relations and ease visa restrictions. That will boost the movement of professionals and exporters across the two countries.

The decision comes just days before the Saarc Summit in Maldives.

Pakistan made it clear the move would not in any way affect its stand on the Kashmir issue. At the Saarc Summit on November 10-11, Prime Minister Manmohan Singh and will meet his Pakistani counterpart, Yousuf Raza Gilani.
 

TRADE TIES
	2009-10 ($ million)	2010-2011 ($ million)
India’s exports to Pakistan	1,573.32	2,333.62
Growth rate (%)	9.27	48.32
India’s total exports	178,751.43	251,135.89
Growth rate (%)	-3.53	40.49
Pakistan’s share in  India’s exports (%)	0.88	0.93
India’s imports from Pakistan	275.94	332.51
Growth  rate (%)	-25.45	20.50
India’s total imports	288,372.88	369,769.13
Growth rate (%)	-5.05	28.23
Pakistan’s share in  India’s imports (%)	0.10	0.09
Growth rate over previous year           Source: Ministry of commerce and industry

“We are clear that economic engagement, removing barriers to trade and facilitating land transport would help the region. Eventually, economic and industrial activity will bring prosperity and stability. It will generate jobs and help the South Asian region,” said commerce and industry minister Anand Sharma.

He said he had a word with Pakistan’s commerce minister, Makhdoom Amin Fahim, after the decision was passed by Pakistan’s cabinet. Sharma is expected to lead a large business delegation to Islamabad in February 2012.

In 2010-11, India-Pakistan trade stood at $2.6 billion. Both sides have set a target of $6 billion worth of bilateral trade in the next three years. At present, a little more than 12,000 items are on Pakistan’s negative list while 1,948 items come under the positive list. Pakistan is expected to prune the negative list of items soon. India will now be able to export textiles, engineering goods, chemicals, raw materials, spices and other such materials to Pakistan.

Last month, Pakistan’s foreign minister, Hina Rabbani Khar, had indicated the MFN status would soon be granted to India.

"The MFN status will substantially reduce illegal and third country trade with the potential of raising official bilateral trade to $8 billion in less than five years.”

“However, roadblocks like stringent visa rules, non-tariff barriers, difficulty in communication and opening of more trade routes like Wagah still need to be addressed," said CII director general Chandrajit Banerjee.

Ficci said the move would help remove "pessimism" in the bilateral relations between both countries.

Trade with Pakistan reached $1.85 billion in 2010-11, compared to $3 billion with Sri Lanka.

It is expected to increase to $10 billion in the next three years with the grant of MFN status and removal of non-tariff barriers, according to the Federation of Indian Export Organisations.

Under the World Trade Organization rules, trading partners offer MFN status to each other so as to not discriminate between their trading partners.

Granting of MFN status means lowering of tariffs and customs duties.