After dilly-dallying for several years, Pakistan on Wednesday granted the Most Favoured Nation (MFN) status to India in a significant step in improving bilateral ties and boosting two-way trade currently standing at $2.6 billion per annum.
“After a lengthy discussion and a briefing by the Commerce Secretary, the Cabinet unanimously approved the Commerce Ministry's summary to grant Most Favoured Nation status to India,” Pakistan's Information Minister, Ms Firdous Ashiq Awan, told a news conference.
The MFN status, which means that Pakistan will give trade treatment to India at par with its other partners, is likely to boost the bilateral economic ties. India had granted the MFN status to Pakistan in 1996. In 2010-11, India-Pakistan trade stood at $2.6 billion.
Pakistan's move to grant MFN status to India comes ahead of the November 10-11 SAARC Summit in Maldives, where the Prime Ministers of the two countries are expected to meet.
All stakeholders in Pakistan, including the military, were “on board” for the decision to grant MFN status to India, Ms Awan said.
Industry gung-ho
Pakistan's decision to grant MFN status can lead to multi-fold increase in the bilateral trade, industry representatives said on Wednesday.
Describing the decision “momentous”, Indian industry said the move also “augurs well for discussions” at the forthcoming SAARC Summit.
The MFN status would give a boost to bilateral trade which can go up to $8 billion in the next five years, industry body CII said.
According to Assocham, the bilateral trade could go up to $6 billion by 2014.
“The move could also lead to negotiations on opening of mutual investments,” Assocham Secretary-General, Ms D. S. Rawat, said.
The FICCI Secretary-General, Mr Rajiv Kumar, said, “the stage is now set for direct exports to Pakistan. Earlier, India used to export to Pakistan via Dubai (third country exports).”
Mr Kumar said with the grant of MFN status to India by Pakistan, the reciprocal trade barriers will disappear.