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There will be a massive growth in the momentum of regular exchanges between two nations, India and Pakistan, which have started since mid-2011.

Pakistan has given its approval to grant MFN( most-favoured nation) status to India by switching to a system of “negative lists”.

According to this system, Pakistan will restrict the import of around 1,200 items from India. It moved instead to a “negative list,” which bans around 600 items from India but allows trade in all other goods.

Along with exports of textiles and pharmaceuticals from India, a direct trade between the two neighbours will also boost up by this beneficial move.

However Pakistan said, the compromise will only be on MFN tag to import 1,200 items from India in comparison of the earlier regime where only 1,900 products were allowed to import across the border.

The office of Pakistani announced that the government planned to phase out major restrictions on Indian imports by Jan. 1, 2013.
In addition, Pakistan said that there will be no relief on any “core issue” such as Kashmir in the next stage. Kashmir is being affected by trade with India and best relations between two will be built only when this issue has completely ended.

A major force inside of Islamabad has come to phase out the negative list by the end of 2012 and move to a regime that is complies with World Trade Organisation norms.

Third countries such as the UAE was imported several products to Pakistan in the absence of normal relations with India.

But after last year while Commerce & Industry Minister Anand Sharma visited Pakistan, Pakistan granted to permit free trade and as that resulted $2.6 billion trade between India and Pakistan was estimated during last fiscal year.

Pakistan meanwhile will remove 90% items from the negative list through the course of this year and this will assure that the move to progress towards MFN has been given final shape today.

Although the decision of normalizing trade with India by the end of the year is a part of tentative attempts to improve relations between the nuclear-armed neighbors, but India businesses has welcomed this move by saying, “It is clear that both the sides now see normalizing of trade and investment as a benefit for the population of the two countries [and] as also potential to grow regional trade.”