Indian industry calls Pak decision on MFN “momentous”

The Most Favoured Nation (MFN) status would mean that Pakistan will give trade treatment to India at par with its other economic partners.

It would also give a boost to the 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 the mutual investment,” Assocham Secretary General D S Rawat said.

The Chamber is sending a high level delegation,comprising well-known industry leaders like K P Singh of DLF and Sajjan Jindal of JSW to Pakistan later this month. Ficci Secretary General 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).” Kumar said with the grant of MFN status to India by Pakistan,the reciprocal trade barriers will disappear. India had granted Pakistan the MFN status way back in 1996 without getting a reciprocal response.

Besides political considerations,there was a major concern among the Pakistan’s industry that the grant of MFN to India could lead to flooding of Indian goods in the Pakistani markets.

The concerns arose from a big trade imbalance between the two countries. Of the total trade of $2.65 billion in 2010-11,Indian exports were $2.3 billion against $333 million exports from Pakistan. CII said that the move would “pave way for economic integration of South Asia. It would substantially reduce illegal and third country trade.” However,road blocks like difficult visa rules,non- tariff barriers still need to be addressed,the chamber said. Though India and Pakistan are signatories to the SAFTA agreement,Islamabad allows only 1945 Indian items under the trade opening arrangement.