What is the MFN principle? Have India and Pakistan granted each other MFN status?

Most favoured nation (MFN) principle is a principle of non discrimination embodied in Article 1 of the General Agreement on Tariffs and Trade (GATT), which means that countries cannot discriminate between their trading partners. It is a clause applicable to all members of the World Trade Organisation (WTO), and requires each member to treat all other members equally as ‘most-favoured’ trading partners. If a country increases the benefits that it gives to one trading partner, it has to give the same ‘best’ treatment to all the other WTO members so that they all remain ‘most-favoured’.

India accorded Most Favoured Nation (MFN) status to Pakistan in 1996 when both countries became members of the WTO.  Pakistan agreed to grant India MFN status in November 2011 and the process of implementation is ongoing.

• Does India allow all goods to be exported to Pakistan?

Yes, India allows all goods to be exported to Pakistan, except for a list of items that India has banned from being exported to all countries (http://164.100.9.245/exim/2000/NOT/itc(hs)/Eschedule2.pdf).

• Does India allow all goods to be imported from Pakistan?

Yes, India allows all goods to be imported from Pakistan, except for a list of items that India has banned from being imported from all countries (http://indiapakistantrade.org/pdf/India’s-restricted-items-for-imports.pdf).

• Does Pakistan allow all goods to be exported to India?

Pakistan does not specifically restrict any items from being exported to India, except those that are generally restricted from being exported from the country (www.pakcustoms.org/export_policy_order_2009/).

• Does Pakistan allow all goods to be imported from India?

Until 2011, Pakistan allowed only a limited ‘Positive List’ of 1,946 items to be imported from India (http://www.indiapakistantrade.org/policy/Trade%20Policy/Pakistan/Import%20policy%20order/SRO766(1)2009.pdf). In November 2011, Pakistan decided to accord MFN status to India and in March 2012, it shifted to a ‘Negative List’ approach which comprises items that are prohibited from being imported by Pakistan from India. Currently there are 1209 items on the negative list. All other items are permitted to be imported from India (http://www.indiapakistantrade.org/policy/Trade%20Policy/Pakistan/Import%20policy%20order/IPO%202009-Amendment%20March%202012.pdf).

Is there any regional trade agreement that India and Pakistan are members of?

Yes. In 2004 India and Pakistan, as members of the South Asian Association for Regional Cooperation (SAARC), signed the South Asian Free Trade Area (SAFTA) agreement. The agreement has been operational since 2006 (http://www.saarc-sec.org/areaofcooperation/detail.php?activity_id=5).

What tariff concessions are offered by India and Pakistan to each other’s imports under SAFTA?

From January 2013, Pakistan and India being NLDC (non-least developed country) members of SAFTA have reduced their tariffs in the 0-5 percent range (http://www.indiapakistantrade.org/data/policy/SAFTA/Pakistan/2012/S.R.O.588%20(I)-2012.pdf). However, India imposes 8% duty on 264 items (http://www.srtepc.org/Customs_Notification.pdf). The sensitive list consists of items on which no tariff concessions are offered. There are currently 614 items on India’s sensitive list applicable to Pakistan. Pakistan’s sensitive list applicable to India includes 936 items (http://www.indiapakistantrade.org/saftapakistan.php).

Is there a government website which provides information on tariffs, other duties and regulatory requirements?

Yes, the Central Board of Excise and Customs, Ministry of Finance, Government of India runs a web based application that calculates basic customs duties, education cess, countervailing duty (CVD), additional CVD, total duty and provides information on associated regulatory requirements (https://www.icegate.gov.in/Webappl/).

For instance, for women’s or girls’ suits of cotton HS code 620412, the rate of duty (tariff) is 28.852. The import of this item has to comply with the requirement that it does not contain any of the hazardous dyes whose handling, production, carriage or use is prohibited by the Government of India.

The Federal Board of Revenue, Government of Pakistan, maintains a Customs Valuation Gateway to provide valuation related information to the general public and customs officials (http://valuationgateway.fbr.gov.pk/?view=ExternalLink&ActionID= &ArticleID=) . The First Schedule (Pakistan Customs Tariff) under the Customs Act, 1969 specifies the customs duty % for all the items according to HS classification (http://download1.fbr.gov.pk/Docs/201210916104244605CustomsTariff.pdf). An amendment to this schedule is also available on the Federal Board of Revenue website (http://www.fbr.gov.pk/budget/Tariff/Schedule%20(10-6-13).pdf).

Is there a government website which provides data on exports/imports between India and Pakistan?
Yes, the Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India maintains an export-import data bank which has country-wise, commodity-wise and region-wise trade data at HS classification 8 digit level (http://commerce.nic.in/eidb/default.asp).

The Federal Board of Revenue, Government of Pakistan website also provides commodity-wise and country-wise trade statistics of imports/exports on monthly basis at HS classification 8 digit level (http://www.fbr.gov.pk/TradeStatistics/default.asp).

What are the modes of transport currently available to move goods between India and Pakistan?

India-Pakistan trade takes place through the sea, road, rail and air routes.

• What are the main road routes used for trading between India and Pakistan?

The major operational trading road route is through Attari/Wagah. India has notified several road routes which are not operational. These routes were notified by the Government of India under Section 7 of the Customs Act, vide Notification no. 63/94-Cus (NT), dated 21.11.1994 (http://www1.cbec.gov.in/customs/cs-act/notifications/csnt63-94.htm).

• What are the main rail routes used for trading between India and Pakistan?

 Currently there is only one operational rail route along the Amritsar-Attari-Lahore railway line through Attari and Amritsar rail station for movement of cargo between the two countries. The cargo moves either by the goods trains or by freight cars attached to the bi-weekly Samjhauta Express (http://indiarailinfo.com/train/atari-amritsar-samjhauta-express-14608-att-to-asr/15276 ; http://indiarailinfo.com/train/amritsar-atari-samjhauta-express-14607-asr-to-att/15277).

India has notified several rail routes that are not operational. These routes were notified vide Notification no. 63/94-Cus (NT), dated 21.11.1994 (http://www1.cbec.gov.in/customs/cs-act/notifications/csnt63-94.htm).

• Can all commodities be exported from India and imported by Pakistan on the Attari-Wagah road route?

Pakistan allows 137 items to be imported from India on the road route. The list of items can be accessed from –http://www.tdap.gov.pk/pdf/SRO-280-I-2012.pdf.

• Can all commodities be exported from Pakistan and imported by India on the Attari-Wagah road route?

Yes all items can be exported from Pakistan into India by the road route without any restrictions

• Which are the trading routes across Line of Control?

Since October 2008, India and Pakistan have permitted trade across the Line of Control (LoC) on the Uri-Muzaffarabad and Poonch Rawalkot trade routes.

• Which commodities can be traded between India and Pakistan on the trade routes across the LoC?

India and Pakistan have permitted trade in a selected list of 21 primary products across the Line of Control (LoC). Only goods originating in Kashmir from both sides of the border are permitted to be traded on this route, which are allowed to be traded only under a barter system (http://ecostatjk.nic.in/publications/release4.pdf).

Does India allow foreign investment from Pakistan?

Yes. In August 2012, India removed Pakistan from the negative list under the Foreign Exchange Management Act (FEMA), paving the way for investment from Pakistan. India allows investment through government route by Pakistan citizens and companies in sectors/activities other than defence, space and atomic energy.

• Does Pakistan allow foreign investment from India?

Yes, Pakistan allows Indian investments into its markets. Also, the FEMA regulations have been amended to allow overseas direct investment by Indian entities in Pakistan under the approval route since September 2012.