With Pakistan still dragging its feet on granting India the Most Favoured Nation status, foreign secretary Nirupama Rao asked the Pakistan government to explain the delay here on Wednesday.

At a FICCI-organised event, Rao expressed hope that Islamabad would act fast on the recommendation of an advisory panel of Pakistan’s planning commission for granting MFN status to India and shift from a positive list of imports to a negative list regime.

The Pak plan panel had recommended in April this year about MFN to India. India had already granted MFN status to Pakistan in 1996. Islamabad has in the past linked the grant of MFN status to India on first solving the Kashmir dispute. 

“This would be beneficial to both our economies and create a more conducive environment for trade and commerce to flourish,” she said at the FICCI conference on India-Pakistan Economic Relations: Prospects & Challenges in New Delhi.

The foreign secretary added, “Opening trade with India will also have a positive impact on inflation which is afflicting Pakistan especially in the aftermath of the devastating floods.”

Rao said by granting MFN status will achieve a five-fold increase in bilateral trade - from the current $2 billion to $10 billion. “India’s fast growing economy and a large market should be seen as an opportunity by Pakistani business and industry,” the FS said.

Rao urged her counterpart to permit all permissible items for trade via Attari-Wagah route. According to foreign secretary, “As things stand, Pakistan allows only the import of about 110 items from India through the land route, while it allows the export of only one item, cement, to India by the road route.”

Referring to Indo-Pak talks in July this year in Islamabad, the Foreign Secretary said, “We are still committed to take this process forward, as and when the Pakistan side is ready,” she said, adding, “We have made similar suggestions as far as trade across the Line of Control in Jammu and Kashmir is concerned for better facilitation and better logistics.”

India is also taking steps to improve infrastructure facilities on the border to improve the trade relations. “A modern integrated check post (ICP) at the cost of Rs. 150 crores is expected to be ready by April 2011,” Rao commented.

However, the Pakistan chambers of commerce also asked Islamabad to grant MFN status to India. “Pakistan should grant of MFN status to India, but India should also lower the tariffs on goods of interest to Pakistan,” said Sultan Chawla, president, Federation of Pakistan Chamber of Commerce and Industry (FPCCI).

The ministry of commerce said they would be happy to address any issue raised by Pakistan on tariff and non-tariff barrier. “The ministry has a committed team and if any issue of any kind specifically relating to Pakistan is brought to us we go extra mile in removing any kind of systematic problems,” Arvind Mehta, joint secretary (SAARC), ministry of commerce and industry said.