NEW DELHI: Withdrawal of Most Favoured Nation (MFN) status by India is likely to hurt Pakistani industries as it might stop flow of raw materials at competitive prices, experts say. In the wake of the mounting tensions between the two countries, India has decided to review the MFN status given to Pakistan at a meeting called by Prime Minister Narendra Modi here on Thursday.
“Pakistans’s industry will squeeze if India decides to withdraw the status. Diplomatically it will be a good step to isolate Pakistan,” international trade expert with Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said.
In 2015-16, India’s exports to Pakistan stood at $2.17 billion, while imports were $441 million. Exporters body Federation of Indian Export Organisations (FIEO) said that India mainly exports inputs to Pakistani industry such as basic chemicals and cotton, which is vital for their industry.
“Their industry will face issues if India stops these exports. Their cost of manufacturing will go up,” FIEO director general Ajay Sahai said. However, another expert said withdrawal of the MFN status would be a knee-jerk reaction and trade issues should not be involved in these circumstances.
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