In the wake of the mounting tensions between India and Pakistan, India has decided to review the Most Favoured Nation (MFN) status given to Pakistan at a meeting, called by Prime Minister Narendra Modi, in New Deli on Thursday 29 September. Withdrawal of the status is likely to hurt Pakistani industries, as it might stop the flow of raw materials at competitive prices, experts say.
"Pakistans's industry will be squeezed if India decides to withdraw the status. Diplomatically it will be a good step to isolate Pakistan," international trade expert with Indian Institute of Foreign Trade (IIFT), Rakesh Mohan Joshi said.
In 2015-16, India's exports to Pakistan stood at $2.17 billion, while imports were $441 million.
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 its options on how to respond.
India granted the MFN status to Pakistan in 1996 but Pakistan is yet to reciprocate to that. Pakistan is postponing the granting of Non-Discriminatory Market Access (NDMA) or MFN status, due to lack of consensus at home.
India's main exports to Pakistan include sugar, cotton, fresh fruits and vegetables, among others.
However, India Inc. has said that MFN has made no difference to the "abysmally low" level of bilateral trade.
"India-Pakistan trade relations are abysmally low, accounting for less than half a per cent of India's total global trade involving both exports and imports," the Associated Chambers of Commerce and Industry of India (Assocham), said in a release.
"In all, trade with Pakistan was equivalent to 0.41 per cent of India's global merchandise commerce," Secretary General Assocham D S Rawat said in the statement.
"Thus, the MFN (Most Favoured Nation) status, or no MFN, has not made much of a difference to the bilateral trade," he said.
Sources: timesofindia.indiatimes.com, wap.business-standard.com
