No decision taken on revoking MFN status to Pakistan

The Dollar Business Bureau

Despite the ongoing tensions between India and Pakistan, the Indian government is yet to decide on revoking the most favoured nation (MFN) status given to Pakistan, Commerce and Industry Minister Nirmala Sitharaman informed the Parliament on Monday.

India accorded the MFN status as part of the World Trade Organisation’s (WTO) General Agreement on Tariffs and Trade (GATT) to Pakistan in 1996; a year after the World Trade Organisation (WTO) was formed. Pakistan, on the other hand, has not yet granted the MFN status to India. Instead, it has adopted the Non-Discriminatory Market Access (NDMA) agreement with India.

When asked if the government has any proposal to revoke MFN status to Pakistan, Sitharaman said: “No such decisions have been taken so far.”
In a written reply in the Lok Sabha, Sitharaman confirmed Pakistan is yet to grant MFN status for India.

Replying to another question on whether the recent tensions have affected bilateral trade between the two neighbouring countries, the commerce minister said, “While there has been marginal decline in value of bilateral trade between the two countries from $1,208.75 million in the period April to October 2015 to $1,167.91 million in the period April to October 2016, the change in value of exports of individual commodities shows a mixed trend.”

In September, Prime Minister Narendra Modi held meetings with his ministers to review the MFN status given to Pakistan. However, as the commerce minister pointed out, no decision has been taken on revoking it.

Following the Pakistan-based militants carried out a massacre in Uri in Kashmir, several ministers as well as industry body called for discontinuing trade relations with Pakistan. Industry body Assocham said whether MFN or not, ceasing trade relations with Pakistan would not hurt the Indian industry.