Indian Decade

Most Favoured India?

Pakistan has floated the possibility of giving India Most Favoured Nation trade status. Will it actually happen?

Last week, Pakistani Foreign Minister Hira Rabbani Khar announced that her country was finally considering granting India Most Favoured Nation (MFN) status. It has already raised a chorus of objections from some quarters of Pakistan's business and commercial communities, which fear that Indian goods might flood their markets and eat into their markets. The pharmaceutical manufacturers, in particular, have expressed their grave reservations about allowing highly successful Indian companies into Pakistan.

Consequently, it’s far from clear when this long-denied status will finally be offered to India. However, were it to come to fruition, trade between the two fractious neighbours would expand dramatically from the current paltry $2.7 billion (with about an equal amount transacted through illegal channels).

The benefits to both countries and especially to Pakistan, of a freer trade regime are apparent. However, it’s intriguing to consider the timing of Khar's announcement. It comes barely weeks after India and Afghanistan signed an agreement that promises to bolster strategic cooperation. Pakistan, which had been hoping to play a major and influential role in shaping Afghanistan's future as the United States starts to draw down its forces, now suddenly fears that India might be in a position to significantly expand its presence in Afghanistan. Accordingly, the Pakistani foreign and security policy establishments probably deemed it politic to make a nod toward India. Even while making this conciliatory gesture, Khar still felt compelled to harp on an age-old Pakistani shibboleth, namely that the Kashmir dispute needs to be resolved through a free and fair plebiscite.

Given the deep distrust of India that pervades much of Pakistan, the initial hostility of some quarters of its business community and the unwillingness of the military to adopt a more pragmatic stance on the Kashmir dispute, one is forced to wonder if the granting of the MFN status to India will help contribute to a more relaxed milieu in the subcontinent. That said, it will bear watching when this first step toward a slightly more cordial relationship actually transpires.