New Delhi: India has decided to withdraw the Most Favoured Nation status that it had granted to Pakistan under WTO obligations. Despite what its name suggests, bestowing MFN status on a trade partner doesn’t imply that India is giving them special treatment. It essentially ensures non-discriminatory trade between two countries.
India had granted the status to Pakistan in 1996 but the latter had not reciprocated fully. By virtue of this, Pakistan enjoyed benefits of lower tariffs on its exports to India; however, it continued to impose higher tariffs on its imports from India. Now India can raise customs duties to any level on goods coming from Pakistan.
The move is largely symbolic as bilateral trade between India and Pakistan is barely $2 billion per year. India mainly exports cotton, dyes, chemicals, vegetables and iron and steel and imports fruits, cement, leather, chemicals and spices. At present most of the trade is routed through either the United Arab Emirates or Singapore.
