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Ashwini Phadnis
K.R. Srivats

"The tariff action taken by the Pakistan Government is not the right solution to boost trade links. What is desirable is the most favoured nation (MFN) status to India," a senior CII official said.

NEW DELHI, June 27

THE latest move of the Pakistani Government to slash duties on 600 items of trade from India is unlikely to give a major fillip to either the value or the volume of official trade between the two neighbours, officials of the Confederation of Indian Industry (CII) have said.

"The tariff action taken by the Pakistan Government is not the right solution to boost trade links. What is desirable is the most favoured nation (MFN) status to India," a senior CII official said.

While India along with other countries in the South Asian Association of Regional Co-operation (SAARC) had extended MFN status to Pakistan, the Pakistani Government has not reciprocated and extended the MFN status to India, which is required of under the SAARC charter.

However, from June 15, the Pakistan Government had slashed import duty on over 600 items of trade from India. Industry circles view the latest decision of the Pakistan Government as another attempt to revive the South Asian Association of Regional Co-operation (SAARC) process.

Further, officials pointed out that one of the key issues which Indian exporters factored in before undertaking contracts with the Pakistani business community is their ability to honour financial commitments.

"Letters of Credit have to be opened. The Pakistani business community should be in a position to pay. The fact that the Pakistan economy is currently weak does not help in developing closer trading links between India and Pakistan," CII officials said.

The in-principle decision of Pakistan to include India to avail of tariff concession being worked out under South Asian Preferential Trade Agreement (SAPTA) would not bolster trade, officials said even as they expressed concern over surge in trade between Pakistan and Bangladesh.

Senior CII officials also said that the Dubai route was being favoured for exports to Pakistan in view of certain rules that forbid the State Trading Enterprises of Pakistan from directly entering into contracts with private parties in India on certain items.

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