Thaindian News

New Delhi, Nov 3 (IANS) With Pakistan granting MFN status to India and a slew of recent positive gestures by both sides, the stage has been set for a substantive meeting between Prime Minister Manmohan Singh and his Pakistani counterpart Yousaf Raza Gilani on the sidelines of the SAARC summit in the Maldives next week.

Ending dilly-dallying of the past one-and-a-half decade, Pakistan’s cabinet Wednesday granted India Most Favoured Nation (MFN) status that will not only strengthen trade relations between the two countries, but would also act as a confidence-building measure.

The granting of the MFN status has been welcomed by both sides as a crucial step towards normalizing trade relations between the two countries.

“The MFN is equally in Pakistan’s interest. Our exports will become more competitive. And Indian goods exported to Pakistan will become cheaper,” Satish Chandra, a former deputy national security adviser, told IANS.

Savita Pandey, a South Asia specialist at Jawaharlal Nehru University (JNU), said the MFN is a significant symbolic confidence-building move.

“Legal trade between India and Pakistan is very low. Most of the trade takes place through third countries. The MFN in itself will not impact trade relations a great deal,” said Pandey. “Probably, the Pakistan government has given in to the domestic business lobby. However, it’s a positive symbolic move,” said she.

The MFN decision showed a desire by Pakistan’s establishment to normalise relations with India and builds on a slew of goodwill steps and positive messaging in the last few weeks.

Last month, Pakistan was quick to release an Indian helicopter and crew within hours after it strayed into the Pakistani territory, prompting New Delhi to convey its appreciation for the goodwill gesture.

Amid the oft-painted scenarios of rivalry, Pakistan’s Foreign Minister Hina Rabbani Khar said in an interview that Pakistan welcomed the role of all regional players, including India, in stabilizing Afghanistan.

It is against this backdrop of mutual goodwill that Manmohan Singh and Gilani will meet on the sidelines of the eight-nation South Asian Association for Regional Cooperation (SAARC) summit at the picturesque Addu Atoll in the Maldives next week. The meeting could take place either on Nov 8 or 9, reliable sources said.

This will be their first meeting since they last met in Thimphu last year on the margins of the SAARC summit and instructed their foreign ministers to explore ways to reduce trust deficit, paving the way for resuming of the peace process between the two neighbours early this year.

The two leaders are expected to discuss a swathe of bilateral issues, including Kashmir and terrorism.

They are expected to come out with a joint statement declaring their resolve to push forward the peace process. The focus will be on confidence-building measures and increased people-to-people contacts.

Ties between the two nuclear-armed neighbours plummeted to a new low, freezing their dialogue process after 10 Pakistani terrorists unleashed mayhem in Mumbai Nov 26-28, 2008, killing 166 people, including many foreigners.

In this context, Islamabad’s decision to reciprocate New Delhi’s granting of MFN to it in 1996 has set a positive stage for meaningful and productive engagement between the two neighbours whose ties are prone to volatiliy.

At present, Islamabad allows import of only 1,946 items from New Delhi. India does not permit trade in 850 items with Pakistan. This list could see further pruning from both sides as trade grows and businesses of the countries feel the need to diversify into more sectors.

Indian business hopes for an upswing in trade ties and has hailed it “a huge step forward.”

In April-December 2010, bilateral trade is estimated to have jumped to over $3 billion. According to a study by Delhi-based Indian Council for Research on International Economic Relations, given reciprocal concessions, bilateral trade between India and Pakistan could go up to $14.3 billion.