Pulwama terror attack aftermath: India revoking MFN status for Pakistan won't mean much to Islamabad

101Reporters Desk | Feb 15, 2019 | 4 min read


Revoking MFN status wouldn't mean much to Pakistan

Kaswar Klasra 

Islamabad: As India announced it will revoke the Most Favoured Nation (MFN) status for Pakistan in the aftermath of Pulwama attack, Pakistani authorities, as well as exporters believe the move is unlikely to disturb Pakistan given the volume of bilateral trade between the two South Asian States.

Volume of bilateral trade between Pakistan and India was recorded at $2.03 billion in 2016-’17. While Pakistan imported goods worth $1.70 billion from India, volume of its exports to its neighbour remained $334 million. The $1.36-billion trade imbalance was in favor of India.

Ijaz A Khokhar, former chairperson of Pakistan Readymade Garment Manufacturers and Exporters Association//check this as Mubashar Naseer Butt was made central chairman only 5 months ago. Ijaz seems to have held the post formerly. What is his current position in PRGMEA?// says India has never been a favourable destinations for Pakistani goods, and hence, high tariff or revoking MFN status will have little impact on Pakistani exports.

“Revoking of MFN status isn’t a bad news for Pakistani exporters. Volume of bilateral trade between two neighbors is too low. Also, balance of bilateral trade favors India. In any case India’s withdrawal of MFN status isn’t a bad news at all,” Khokhar says.

A senior official in Pakistan’s ministry of trade and industries says India was yet to inform them about its decision of revoking MFN status to Pakistan. “India is yet to communicate its decision on MFN status. I’m in position to comment on this,” he says.

Pakistan government has not yet reacted to India’s withdrawal of MFN status. Abdul Razak Dawood, advisor to the Prime Minister on commerce, textile, industry & production, and investment, declined to comment when approached.

While the neighbouring country may not see much of an impact of withdrawal of MFN status, the move will hurt exporters of leather hides and cheaper fertilizer variants to India. Likewise, Pakistan’s cotton industry will also feel the heat in absence of cotton yarn and other raw textile material exported by India. Lack of cheaper varieties of pharma products and machinery can tease Pakistan as these goods would be difficult to source from elsewhere//why?//. [ will be difficult for Pakistan to import on cheap price. Pakistan may import them from Germany/Europe but only at higher price]

“Pakistan’s textile industry may be in a fix if India imposes ban on export of cotton bales to Pakistan. But, it can find alternative easily,” claims Khokhar.

Data collected from Pakistan’s Bureau of Statistics reveals that Pakistan’s top exports to the world include home textiles ($3.95 billion), cotton fabrics ($3.49 billion), knitted garments ($2.51 billion), woven garments ($2.46 billion), cereals ($1.75 billion), articles of leather ($0.631 billion), sugar and confectionary ($0.511 billion), medical and precision equipment ($0.410 billion), fish ($0.406 billion) and cement ($0.385 billion).

Above mentioned products make 80.46% of Pakistan’s total exports. Indian market has never been a good destination for Pakistan goods. Despite odds//such as?//[ odds mean skirmishes across birder and diplomatic constraints] , Pakistani textile products make way to Indian market. Among Pakistan’s exports to India, home textiles stood at $1.18 million, cotton fabrics at $1.13 million, knitted garments at $1.29 million, woven garments at $2.69 million, articles of leather at $0.920 million, sugar and confectionary at $0.819 million, medical and precision equipment at $11.78 million, fisheries at $0.166 million and cement at $87.18 million.

According to Pakistan’s bureau of statistics, bilateral trade between Pakistan and India had increased by 6% in 2017-18 to $2.4 billion, with $1.9 billion imports from India. Goods worth $500 million were exported to India.

Currently, majority of trade between India and Pakistan is routed through UAE. Singapore is another route. Volume of trade between Pakistan and India either through the UAE or Singapore stands at $3 billion//source for this info? And is this outside the $2.4bn in bureau of stats’ records?// [ independent media reports suggested that Pakistan importered Indian goods worth $3 billion via UAE and Singapore. Yes, it's other than $2.4 billion direct bilateral trade].

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