With Pakistan granting MFN status to India and a slew of recent
positive gestures by both sides, the stage has been set for a
substantive meeting between Prime Minister Manmohan Singh and his
Pakistani counterpart Yousaf Raza Gilani on the sidelines of the
SAARC summit in the Maldives next week.
Ending dilly-dallying of the past one-and-a-half decade,
Pakistan's cabinet Wednesday granted India Most Favoured Nation (MFN)
status that will not only strengthen trade relations between the
two countries, but would also act as a confidence-building
The granting of the MFN status has been welcomed by both sides as
a crucial step towards normalizing trade relations between the two
"The MFN is equally in Pakistan's interest. Our exports will
become more competitive. And Indian goods exported to Pakistan
will become cheaper," Satish Chandra, a former deputy national
security adviser, told IANS.
Savita Pandey, a South Asia specialist at Jawaharlal Nehru
University (JNU), said the MFN is a significant symbolic
"Legal trade between India and Pakistan is very low. Most of the
trade takes place through third countries. The MFN in itself will
not impact trade relations a great deal," said Pandey. "Probably,
the Pakistan government has given in to the domestic business
lobby. However, it's a positive symbolic move," said she.
The MFN decision showed a desire by Pakistan's establishment to
normalise relations with India and builds on a slew of goodwill
steps and positive messaging in the last few weeks.
Last month, Pakistan was quick to release an Indian helicopter and
crew within hours after it strayed into the Pakistani territory,
prompting New Delhi to convey its appreciation for the goodwill
Amid the oft-painted scenarios of rivalry, Pakistan's Foreign
Minister Hina Rabbani Khar said in an interview that Pakistan
welcomed the role of all regional players, including India, in
It is against this backdrop of mutual goodwill that Manmohan Singh
and Gilani will meet on the sidelines of the eight-nation South
Asian Association for Regional Cooperation (SAARC) summit at the
picturesque Addu Atoll in the Maldives next week. The meeting
could take place either on Nov 8 or 9, reliable sources said.
This will be their first meeting since they last met in Thimphu
last year on the margins of the SAARC summit and instructed their
foreign ministers to explore ways to reduce trust deficit, paving
the way for resuming of the peace process between the two
neighbours early this year.
The two leaders are expected to discuss a swathe of bilateral
issues, including Kashmir and terrorism.
They are expected to come out with a joint statement declaring
their resolve to push forward the peace process. The focus will be
on confidence-building measures and increased people-to-people
Ties between the two nuclear-armed neighbours plummeted to a new
low, freezing their dialogue process after 10 Pakistani terrorists
unleashed mayhem in Mumbai Nov 26-28, 2008, killing 166 people,
including many foreigners.
In this context, Islamabad's decision to reciprocate New Delhi's
granting of MFN to it in 1996 has set a positive stage for
meaningful and productive engagement between the two neighbours
whose ties are prone to volatiliy.
At present, Islamabad allows import of only 1,946 items from New
Delhi. India does not permit trade in 850 items with Pakistan.
This list could see further pruning from both sides as trade grows
and businesses of the countries feel the need to diversify into
Indian business hopes for an upswing in trade ties and has hailed
it "a huge step forward."
In April-December 2010, bilateral trade is estimated to have
jumped to over $3 billion. According to a study by Delhi-based
Indian Council for Research on International Economic Relations,
given reciprocal concessions, bilateral trade between India and
Pakistan could go up to $14.3 billion.