Pakistan is likely to grant most favoured nation (MFN) status to India within ongoing month of January by abolishing the negative list of trade, a top official of Commerce Ministry said on Wednesday.

He further said that process of granting MFN status to India was delayed due to the reservations of local industry that would be addressed soon. Commerce Ministry is likely to issue notification to eliminate the negative list of trade in January 2013. He said that the government has already decided in principle to grant MFN status to India and there would be no change in its stance, he added.

Earlier, Pakistan failed to grant MFN status to India from January 2013, as it could not abolish the negative list of trade. However, federal cabinet, which met on January 3, has shown concerns over the delay in granting MFN status to India and directed the Commerce Ministry to expedite the process of eliminating negative list. India at present can export all items to Pakistan other than those 1,209 items put on the negative list.

It is worth mentioning here that announcement of granting MFN status to India was delayed for some time as certain forces are pressing the government to avoid doing this.They said various trade and industry sectors, including automobile, pharmaceutical, and agriculture and auto parts, are bitterly opposed to giving the MFN status to India.

They fear that the local markets would be flooded with Indian goods, which are cheap, because of low input cost in India. Apart from local industry, Federal Minister for Textile Industry, Makhdoom Shahab-ud-Din maintained that a level playing field must be created for Pakistan’s textile products relative to Indian products through implementing a uniform tax regime before the MFN status is granted to India Keeping aside the reservation of local industry, sources said, the government of Pakistan wants to improve its relation with India by granting MFN status. Sources added that government would complete this process in next few weeks.

Trade relations have improved significantly between the two countries and India granted MFN status to Pakistan in 1996, but non-tariff barriers remained intact on exports from Pakistan and both sides did not make much of progress towards trade liberalisation.