No change in Pakistan's MFN status
The Commerce and Industry Minister, Nirmala Sitharaman, confirmed that Pakistan continues to enjoy 'Most Favoured Nation' (MFN) status and so far there has been no decision to review it. Sitharaman conveyed this in response to a question as to whether the MFN status will be reviewed in response to Uri attack. The MFN status had been extended to Pakistan by India in 1996.
Most Favored Nation - Definition
A nation grants 'Most Favored Nation' clause to another if it is interested in increasing trade with that nation. The countries achieving 'most favored nation' status are given certain trade advantages, like reduced tariffs on imported goods.
'Most favoured nation' Status
In 1996, in accordance with the World Trade Organization's 'General Agreement on Tariffs and Trade' (GATT), India accorded Pakistan 'Most Favoured Nation' (MFN) status. Pakistan and India, as signatories of GATT, are required to extend MFN status to each other, WTO member countries and not discriminate amongst trading partners. However, despite India extending MFN status, Pakistan has never extended MFN status to India.
India-Pakistan bilateral trade
During April to October 2015, bilateral trade between the two countries stood at $1,208.75 million. In comparison, despite the escalating tension between India and Pakistan since Uri attack, during April-October 2016, there has only been a marginal decline to $1,167.91 million.
Post-Uri: Review of MFN Status
Soon after Pakistan-based terrorists attacked an army camp in Uri, Kashmir, several ministers and industry bodies had called for halting trade relations with Pakistan. Industry body, ASSOCHAM, said regardless of the MFN status, ceasing trade with Pakistan would not adversely impact the Indian industry. Subsequently, in September itself, PM Modi had held meetings with ministers to review Pakistan's MFN status.
No change in Pakistan's MFN status
The Commerce and Industry Minister, Nirmala Sitharaman, confirmed that Pakistan continues to enjoy 'Most Favoured Nation' (MFN) status and so far there has been no decision to review it. Sitharaman conveyed this in response to a question as to whether the MFN status will be reviewed in response to Uri attack. The MFN status had been extended to Pakistan by India in 1996.
Trade relations with Pakistan
Nirmala Sitharaman, on being asked in Lok Sabha, whether government proposed to make changes in trade-relations with Pakistan, she replied: "No decision has been taken, so far, in context of various factors including composition of bilateral trade." Furthermore, when asked if panel had been established to discuss trade issues between both countries, Sitharaman responded: "No such committee has been constituted so far."
