LAHORE: The Pakistan government move to grant Most Favoured Nation (MFN) status to India in the wake of increasing trade imbalance between the two countries has raised serious concerns among the local manufacturers who believe it will force them to close down their businesses altogether.

India granted MFN status to Pakistan in 1996 but trade balance remained heavily in favour of New Delhi. Since 2008, the deficit has almost increased by four times in favour of India, according to a leading industrialist who had been a former office-bearer of the Lahore Chamber of Commerce and Industry.

Quoting State Bank’s statistics, the industrialist said Pakistan faced a deficit of $719.857 million in fiscal year 2008-09 with India, with imports payment of $1.033 billion and export receipts of $313.037 million. The deficit in the next fiscal 2009-10 surged up by 11 per cent, with $1.061 billion imports payment and $260 million export receipts. The balance further deteriorated during the last fiscal year as Pakistan faced a deficit of $1.158 billion as compared to $802 million in 2010, depicting an increase of 44 per cent in 2011.

“India granted us the MFN status but imposed non-tariff barriers to trade (NTBs) to protect and support their local industries from imports. The NTBs are still a major hindrance for Pakistani exporters to access the Indian market freely,” said the industrialist.

A former president of Rawalpindi Chamber of Commerce and Industries (RCCI) said that Indians had almost unchecked access to Pakistani market. Due to having economies of scale, many Indian products are much cheaper than Pakistani goods which simply can’t compete in terms of prices, though having better quality than Indian products,” he said.

“Pakistan has yet to grant MFN status to India but has been maintaining a ‘positive list’ of importable items from India. The number of items on the list has been continuously increasing. “The list started with seven items when the trade was resumed after nine years in 1974, it reached 800 items in 1996 when India granted MFN status to Pakistan. It rose to 1,945 items by the end of 2011 when the Pakistan government moved towards granting India the MFN status,” said the RCCI member.

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