Prime Minister Narendra Modi will meet senior officials from the Ministry of Commerce and Industry and the Ministry of External Affairs on September 28 to evaluate India’s options on trade-related relations with Pakistan.
Earlier, taking the offensive right into the heart of Pakistan, Prime Minister Narendra Modi chaired a review meeting of 56-year-old Indus Water Treaty during which it was decided that India will “exploit to the maximum” the water of Pakistan-controlled rivers, including Jhelum, as per the water-sharing pact. PM Modi has warned that “blood and water cannot flow together.”
The MFN status was accorded in 1996 under the WTO’s General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to the agreement, according to which they have to treat each other and rest of WTO member countries as favoured trading partners.
PM Modi’s possible revision of the MFN treatment accorded to Pakistan will effectively close down trade further between the two countries.
When a country receives MFN status, it is expected to raise trade barriers and decrease tariffs. It is also expected to open up the market to trade in more commodities and free flow of goods.
In the last 10 years, two-way trade has crawled to $2.7 billion in 2014 from $600 million in 2004. In 2015-16, India exported merchandise worth $2.17 billion, making up just 0.82 per cent of its total exports. Imports from Pakistan were $441.03 million, or 0.11 per cent of India’s total imports.