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Revoking MFN status to Pak not to impact India's trade

Just after a day when India, reviewed the Indus water treaty. India all set to review the MFN status given to Pakistan in the year 1996, India Inc today said the move to withdraw the status will not make much difference as the trade between the two countries is "almost negligible.

Pointing out that bilateral trade between the neighbors is "quite low", industry bodies said India's move to grant the status to Pakistan had not made much of a difference as it was not reciprocated.

One sided move: India granted MFN status to Pakistan in 1996. But, Pakistan has been either putting certain unacceptable pre-conditions or postponing it on the pretext of internal opposition/differences.

"It is up to the government to take a decision. We will stand by the government's decision. Anyway the trade between the two countries is quite low. Moreover, Pakistan has never given us this status," Ficci Secretary General A Didar Singh told PTI.

No reciprocation: Since 20 years have passed by, since when India granted the MFN status to Pakistan but Pakistan is yet to reciprocate. India granted MFN status to Pakistan in 1996. However, in 2012, Pakistan had committed itself to give the MFN status but missed its own deadline of December 31, 2012 owing to domestic opposition. In 2012, Pakistan had almost decided to grant India MFN, but the move collapsed. 

MFN to NDMA: While India gave the MFN status, Pakistan very conveniently chose to grant the Non-Discriminatory Market Access (NDMA) status to India. NDMA is a nomenclature chosen by Pakistan to avoid political aftermath at home of giving India MFN (Most Favoured Nation) status. However, Pakistan has been delaying the grant of NDMA status too.

India's exports to the neighboring country worked out to USD 2.17 billion, or 0.83 per cent, of the total Indian outward shipments while imports were less than USD 500 million, or 0.13 per cent, of the total inward shipments. It is just a symbolic deal between India and Pakistan since the trade is quite low.

"The trade between India and Pakistan is almost negligible. The review will not cut much ice as far as trade is concerned but will definitely be a setback to normalisation of trade between the neighbours in the future," Assocham Secretary General D S Rawat said.

After the Indus Water Treaty, India will review the Most Favoured Nation (MFN) status given to Pakistan at a meeting called by Prime Minister Narendra Modi here on Thursday.

The decision to review the MFN, which was granted by India unilaterally in 1996, comes in the wake of the Uri attack over which India is weighing options to respond.

The MFN status was accorded in 1996 under WTO's General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to this which means they have to treat each other and rest of WTO member countries as favored trading partners.