The Senate was told that Pakistan would benefit from the outcome of MFN status to India because the trade cost would be reduced owing to availability of raw materials and machinery at a cheaper rate. - File photo

ISLAMABAD: The purchasing power of Pakistani consumers will increase with the grant of MFN status to India because they will have access to goods at competitive rates, according to Commerce Minister Makhdoom Amin Fahim.

He told the Senate on Tuesday that the local industry would gain access to the large Indian market with a customer base estimated between 300 and 500million consumers.

Answering a question put by Begum Najma Hameed, the minister said the government was in process of normalisation of trade relations with India. 'It will culminate in the grant of Most Favoured Nation (MFN) status to India,' he said, adding that so far India had not been accorded this status.

He said that currently the import of 1,958 items from Indiawas allowed as per the Import Policy Order 2010-11.

The Senate was informed that in order to protect the interests of the domestic industry, the ministry of commerce planned to implement steps aimed at normalising trade ties with India in phases.

'The items on negative will not be permitted for import from India,' the minister said.

He said the commerce ministryhad engaged in extensive consultation process with domestic stakeholders, including the chambers and sectoral trade associations to identify vulnerable products for inclusion in the negative list.

'In order to firm up the negative list on a sound economic basis, the commerce ministry engaged the services of country's premier research institutions to analyse and firm up items to beincluded in the negative list,' the minister said.

He said the timeframe for the phasing out of negative list based on the stakeholders inputs and recommendations.

The process of formulation of negative list will be completed by the mid February 2012.

The Senate was told that Pakistan would benefit from the outcome of MFN status to India because the trade cost would bereduced owing to availability of raw materials and machinery at a cheaper rate.

The freight cost will be reduced and major multi-national firms have production and manufacturing facilities in India and procuring goods from India will reduce the time and cost of procurement, which will eventually lower the cost of doing business in Pakistan.

'This will improve the overall competitiveness and productivityof industry in Pakistan,' the minister said.

'The business linkages between India and Pakistan will improve the competitiveness of local industry and our producers will gain access to a large market.

The Senate was told that with the grant of MFN status to it, India would not be able to argue that Pakistan did not comply with the WTO regulations.