India to review MFN status to Pakistan

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SME Times News Bureau | 28 Sep, 2016
Seeking to step up pressure on Pakistan, Prime Minister Narendra Modi has called a meeting on Thursday to review the Most Favoured Nation (MFN) status accorded to the neighbour, informed sources said here.

They said the meeting will be attended by senior officials, including those from the External Affairs and Commerce ministries.

The meeting follows India's decision on Monday to revisit the 56-year-old Indus Waters Treaty with Pakistan, in the wake of the September 18 terror attack in Jammu and Kashmir's Uri that killed 18 soldiers.

India granted the MFN status to Pakistan in 1996 but the neighbouring country has so far not reciprocated.

According to obligations under the World Trade Organization (WTO), member countries shall extend MFN status to each other automatically unless otherwise specified in the agreement or the schedule notified to the WTO by the member country.

India, which has blamed militants from Pakistan for the Uri attack, has been moving on several fronts against Pakistan as part of its response to isolate the neighbouring country diplomatically for "exporting terror".

India Inc. said that MFN has made no difference to the "abysmally low" level of bilateral trade between the two countries.

"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 here.

Official data showed that out of India's total merchandise trade of $643 billion in 2015-16, Pakistan accounted for a meagre $2.67 billion.

"In all, trade with Pakistan was equivalent to 0.41 per cent of India's global merchandise commerce," Assocham Secretary General D.S. Rawat said in the statement.

"Thus, the MFN status, or no MFN, has not made much of a difference on the bilateral trade."

"While India has granted Pakistan the MFN status, Islamabad had not responded. But even with the MFN status, Pakistan's exports to India remained less than half a billion dollars," he added.

India's exports to Pakistan last year amounted to $2.17 billion, or 0.83 per cent of total Indian exports, while imports were 497 million, or 0.13 per cent of total inward shipments.

The major Indian exports to Pakistan include items like organic chemicals, vegetables, cotton, plastics and processed food waste, like fodder, while imports from Pakistan include cottons, fruits and nuts, mineral fuels, wax, sulphur, lime, cement and hides.