MFN status to India will boost direct trade with Pakistan.

NEW DELHI: Grant of most favoured nation (MFN) status to India by Pakistan will open up unhindered direct trade between the countries and also help in reducing transactions cost, Parliament was informed today.

"If MFN status is granted by Pakistan to India, it will open up unhindered direct trade between the two countries. Trade would then take place bilaterally at significantly lower cost. It will also restore Pakistan's international commitment under WTO of reciprocity to MFN status," Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha.

She said that India will also gain considerably by restoration of direct trade connectivity with Pakistan which is estimated to raise the country's exports quite substantially.

"Experts believe total bilateral trade can rise to the level of USD 10-12 billion in the years to come," she said.

Pakistan is yet to grant the status to India. India granted the status way back in 1996.

"At present trade between India and Pakistan takes place through UAE and Singapore to the tune of USD 3 billion as reported," she added.

The two-way commerce between the countries stood at USD 2.72 billion.

Pakistan has decided to postpone grant of Non- Discriminatory Market Access (NDMA) status to India due to lack of consensus at home.

NDMA is a nomenclature chosen by the Pakistan government to avoid political ramifications at home of giving India the MFN status.

India's main exports to Pakistan include sugar, man-made filaments and chemicals, while its imports comprise mineral fuels, among others.

In a separate reply, Sitharaman said the government has not decided its policy on permitting foreign direct investment in multi-brand retail trade.

"No decision on FDI in multi-brand retail trading has been taken," she said, adding that FDI inflows of USD 273.61 million have been recorded by the government since allowing FDI in retail.

As per the current policy, 51 per cent FDI is permitted in multi-brand retail trading. When the UPA-led government announced the policy, the BJP had strongly opposed.

However, 100 per cent FDI is permitted in single brand retail under automatic route.

In another reply, Sitharaman said the textiles ministry's export target of USD 45 billion for 2014-15 has not been revised.

On Special Economic Zones (SEZ) she said, as on July 22, the Board of Approval has cleared 69 requests for de-notification of SEZs.

Source : economictimes.indiatimes.com