The Telegraph
Monday , May 26 , 2014
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Swearing-in platform for close trade ties

New Delhi, May 25: The oath-taking ceremony of Prime Minister-elect Narendra Modi will set the stage for India to hammer out a series of trade pacts with its neighbours.

On the cards are negotiations with Islamabad to quickly get the most-favoured nation (MFN) status under a different nomenclature in return for lowering of duties on garments from Pakistan.

A more difficult and long drawn-out negotiation would be with Dhaka over allowing the transit of Indian goods to the Northeast through Bangladesh in return for a Teesta-water-sharing deal, sources said.

Pakistan has indicated its willingness for a trade pact with the new government. Its commerce minister Engineer Khurram Dastgir Khan said on Thursday, “We are ready and waiting for the Indian government’s indication for holding talks on the non-discriminatory market access issue.”

Top officials said they expected Pakistan to announce MFN status for India using the neutral nomenclature of non-discriminatory market access once a deal to allow limited shipments of Pakistani textiles at lower duties is hammered out. Pakistan has asked India to reduce the duty on more than 250 textile products to a peak tariff of 7.5 per cent, which officials indicated would be considered.

India is also expected to limit the number of goods in which trade is not allowed to 100, of which 75 will be farm produce.

All WTO signatories are duty bound to give other signatory nations equal treatment while levying import duty under a clause which asks them to give each other MFN status. However, for the last 16 years Pakistan had dithered on granting India MFN status. India had granted Pakistan the status in 1996. The move is expected to reduce high tariff walls against Indian goods, which force trade with Pakistan through third nations.

Bangla talks

The new government would want to revive talks with Bangladesh for the transport of goods to the Northeast. Officials feel the move, which was grounded after talks to share Teesta river waters floundered, can be revived again.

The sharing of Teesta waters has been a sticky issue with Bengal chief minister Mamata Bannerjee yet to show any willingness to agree to the treaty.

Sharing of water is a central subject but in India state governments are taken into confidence on international issues that may affect them.

Officials said moves to get Sikkim chief minister Pawan Chamling, who is believed to be in good terms with Modi, to share greater water resources downstream could help the Bengal leader take a decision.

Bangladesh wants greater access to India’s mainland and northeastern markets. Bangladesh, the world’s biggest exporter of readymade garments, has been eyeing India’s $40-billion apparel market.

Afghan transit

Business chambers expect New Delhi to take up the issue of transit of Indian goods to land-locked Afghanistan through Pakistan on the sidelines of Narendra Modi's swearing in on Monday.

Both Afghanistan president Hamid Karzai and Pakistan premier Nawaz Sharif will be in New Delhi to attend the swearing-in ceremony.