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  India   MFN status for Pakistan: Modi to take call tomorrow

MFN status for Pakistan: Modi to take call tomorrow

AGE CORRESPONDENT
Published : Sep 28, 2016, 2:43 am IST
Updated : Sep 28, 2016, 2:43 am IST

Prime Minister Narendra Modi will chair a meeting on Thursday to review the “most favoured nation” (MFN) status for trade granted to Pakistan.

Prime Minister Narendra Modi. (Photo: AFP)
 Prime Minister Narendra Modi. (Photo: AFP)

Prime Minister Narendra Modi will chair a meeting on Thursday to review the “most favoured nation” (MFN) status for trade granted to Pakistan. The strong message that “it is no longer business as usual” comes as India continues to weigh its options to hit back at Pakistan on multiple fronts after the Uri terror attack.

Despite having enjoyed the MFN status for 20 years, Pakistan is yet to reciprocate. The move comes a day after India decided to review a 56-year-old river water-sharing treaty to squeeze Pakistan by reducing its current share after terrorists backed by it killed 18 Indian soldiers in Kashmir’s Uri on September 18.

The MFN status was accorded to Pakistan unilaterally in 1996 under WTO’s General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to this, which means they have to treat each other and the rest of WTO member countries as favoured trading partners.

The country, which is granted the status, receives equal trade advantages, including fair import duties. But if India withdraws the MFN status, it will not have much impact because Pakistan accounts for only a fraction of India’s goods trade.

According to industry body Assocham, out of India’s total merchandise trade of USD 641 billion in 2015-16, Pakistan accounted for a meagre $2.67 billion. India’s exports to the neighbouring country worked out to $2.17 billion, or 0.83 per cent, of the total Indian outward shipments while imports were less than $500 million, or 0.13 per cent, of the total inward shipments.

Though Pakistan did not immediately react to India’s decision to review the MFN status, it reacted sharply to the move to review the 1960 Indus Waters Treaty and “exploit to the maximum” the water of Pakistan-controlled rivers with PM Modi saying, “Blood and water cannot flow together”. Pakistan said India’s move was “an act of war”, and it could approach the UN as well as the International Court of Justice if the water-sharing pact was suspended.

Location: India, Delhi, New Delhi