MFN status to India: Commerce Ministry in an awkward situation

The Commerce Ministry has reportedly begun dragging its feet in the grant of the most favoured nation (MFN) status to India in response to concerns by some parliamentarians, the establishment, the Ministry of Foreign Affairs, and business community, the four key stakeholders, sources told Business Recorder.
The Commerce Ministry is in an awkward situation, given that the Indian Minister for Commerce and Industry, Anand Sharma, is due in Pakistan on February 12, 2012 on a five-day official visit. "What I know is that the Defence Ministry, Foreign Ministry, Parliament and business community are not in line with the Commerce Ministry on the pace of development on trade," said an insider working in Foreign Trade Wing of Commerce Ministry.
India is also organising ''Indian Show'' on February 11-13 in Lahore, aimed at proving that Indian industry is far ahead, as compared to Pakistan, in all fields. Over 400 exhibitors will be participating in this show and a 100-strong CEOs delegation will be accompanying the Minister. The country''s business community has clearly communicated to the Commerce Ministry in its Bhurban Declaration 2012 that MFN status to India may be awarded only after giving consideration to the interests of local manufacturing sector. The upcoming agreements ie customs co-operation, mutual certification and visas, should be reviewed by the business community.
Sources said that a key proposal regarding inauguration of trade gate at Wahgah border, jointly by the Commerce Ministers of the two countries, has already been shelved. "Though Commerce Secretary Zafar Mahmood claims that he has taken all stakeholders on board for trade normalisation with India, insiders fear a backlash after a move to grant MFN status to India," said an official.
Last week, Indian High Commissioner met Commerce Secretary to discuss the upcoming visit of Anad Sharma. However, it is still unclear whether he obtained permission from the Ministry of Foreign Affairs for the visit or not, which is a prescribed policy of the Government of Pakistan. Mrs Rubina Akhtar, sources said, is the person in the Commerce Ministry who actually knows what is happening on the issue of India.
Sources in the Ministry of Foreign Affairs quoted the Indian Minister for Commerce and Industry as saying that economic engagement lies at the heart of strong and friendly relations between the two countries. "As a precursor to my visit, the Government of India is organising the India Show from February11 to 13, showcasing the best of Indian industry, cuisine and culture", sources quoted Indian Minister as saying in a recent letter.
Sharma, sources said, has invited his Pakistani counterpart as guest at Indian Show with the hope that his presence would be a source of encouragement to Indian industry, and send a positive message to the business community of both sides about the sincerity of efforts being made for normalisation of trade relations.
India still practices import licensing, import quotas (infrequently), government or government mandated import monopolies and a variety of other non-tariff barriers. The major non-tariff barriers are as follows: (i) visa and travel restrictions; (ii) inter-provincial movement of goods; (iii) limited number of ports and inland custom posts for imports; (iv) customs clearance and customs valuation; (v) State Trading Enterprises (STEs); (vi) excessive use of trade defence measurers; (vii) Trade Rate Quotas (TRQs); (viii) technical standards and regulations; and (ix) import regulations.