Wednesday, November 9, 2011

Advantages and Disadvantages of offering India MFN status

The meaning of most favourable nation is not what it literally means and renders a lot of people into misconception. Offering India the most favourable status does not mean that we are submitting to India or giving up Kashmir as the core issue among the two countries. India has given Pakistan most favourable nation status since 1960, has it changed anything among these countries. I bet the same when Pakistan will do the same. China has territorial disputes with India yet it is bolstering its trade with India. We should also be open minded and bolster our trade with India.
By increasing trade with India there will be stiffer competition for Pakistani businessmen and they will have to increase their quality and reduce the prices in order to cope with Indian onslaught. Since free and open border trade is going on with China and Pakistani business community has survived it, there is no chance that Pakistani Businessmen can not withstand Indian Products. But this thing alone cannot be the basis of giving India Most Favourable Nation Status. We will have to work tactfully.
Things which have been imported from half way around the world will be imported from neighbourhood and cost will be reduced drastically. On the other hand, Pakistani products will also reach Indian market more easily. 

I understand and comprehend that Pakistan has passed through various diplomatic failures since 9/11. This has been because of directionless decisions. This act will also go begging if we will not get full advantages of it. We must pressurized India to reduce the tax duties placed by Indian authorities on Pakistani products. Secondly, we must also have to do some subsidization on various fields.
Take agriculture as an example, Indian agricultural industry is heavily subsidized. The tractor in India costs half the cost of it in Pakistan. Urea cost is four times lower than in Pakistan. Electricity is almost free to the farmers while in Pakistan its cost is unbearably high. Same can be said for the taxes on agricultural products. So, owing to these factors the cost of the products will become inevitably higher as compared to India.
Thus it will be natural for the consumers to buy Indian products over those of Pakistani origin. If government is not going to change its policy towards the agriculture and Business industry, Pakistan is going to face a huge knock out blow and there will be no chance for Pakistan to standup again. Government should ponder onto this matter.

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