Boosting trade

The Pakistani government has decided to remove artificial trade barriers with India and give it the "most favored nation" (MFN) status which will help the country to profit more from India's booming economy.

"The government presented a summary in the cabinet meeting today to grant MFN status to India, which was unanimously approved," said Pakistan's Federal Information Minister Firdous Ashiq Awan.

The cabinet's mandate will enable Pakistan to export more goods to India and give an impetus to its struggling economy. According to World Bank estimates, the annual trade between India and Pakistan totals around one billion dollars and has the capacity of expanding to nine billion dollars after trade barriers are removed.

While some businesses have welcomed the decision, many are raising concerns about Pakistani products losing out to cheaper Indian goods. The move was also initially opposed by military lobbies in Pakistan, who insisted on resolving the Kashmir issue before normalizing trade relations. However, during a meeting of the Indian and Pakistani commerce secretaries in September this year, the Pakistani government assured India it would be granted the MFN status.

The unanimous vote by Pakistan's cabinet symbolizes the first major step towards reconciliation by Pakistan after the two countries agreed to resume peace talks earlier this year. India accuses Pakistan of harboring terrorists who were behind the Mumbai attacks in 2008 which left more than 160 people dead.

Agencies: AFP, dpa (mg)
Editor: Sarah Berning