The two neighbouring countries have immense potential for stepping up bilateral trade and there is lot of complementaries in the economies of both the countries for giving a big push. But the deterioration of political relations acted as a stumbling block to trade expansion affecting the trade and business between the two countries in the recent years. Following the Mohali spirit, fresh efforts are being made to bring some normalcy in trade relations without waiting for the improvement in political relations.

While most favoured nation (MFN) status is a mere courtesy between nations, Islamabad had earlier linked MFN with a resolution of the Kashmir issue and although bilateral ties have been transformed in the past two decades, it has never been able to find the courage to explain the change to its domestic audience.

Delhi’s other major crib revolves around the 1,938 items on Pakistan’s “positive list,” again the only country in South Asia which has instituted such a list for India. This means that Pakistan will import only those items on the list and not anything else. Of these, only a 100-odd items are allowed to be exported via Wagah/Attari.

Every other South Asian nation has a “negative list” with each other, which means that each country protects certain sectors but opens the rest. Pakistan does the opposite.

According to industry sources, Pakistan is likely to raise the imposition of non-tariff barriers by India on its exports to India, such as quality checking on the cement that India’s Bureau of Indian Standards imposes, as well as the fact that India protects its own economy by not allowing Pakistan to export textiles and agricultural goods in large quantities.

Indian officials agreed on the condition of anonymity that the textile and agriculture lobbies at home prevented the political class from making any offers that may break the ice, even though any Pakistani imports would hardly constitute a drop in India’s large textile market.

Clearly, a lack of continued political determination to improve relations will continue to stymie the economic relationship, though analysts say the prospects are extraordinary. It is believed that Delhi could offer to connect Pakistan’s electricity grid with India’s northern grid, much as it has done with Bangladesh in the east and Sri Lanka in the south. (IPA Service)