In a major change of stance, Pakistan on Monday said granting the ‘Most Favoured Nation’ (MFN) trade status to India will impact its economy adversely because of the uneven trade balance. India has to take adequate steps to increase imports from Pakistan to obtain MFN status, according to Pakistan High Commissioner to India Abdul Basit.

“The balance of trade is heavily in India’s favour. So, if Pakistan was to extend MFN or non-discriminatory market access (NDMA) to India, we do not know what will happen to our economy. It (India) will have to take certain measures where Pakistan’s exports can be increased. We expect our neighbour not to apply non-tariff barriers across the board and show some exemption to its neighbour Pakistan,” Basit said at an event – India Pakistan Trade Normalisation – by ICRIER here.

Basit said one of the steps could be relaxing the stringent sanitary and phytosanitary measures that India imposes on Pakistani goods. He highlighted the number of non-tariff barriers imposed by India on imports from Pakistan.

Pakistan was supposed to grant the MFN status to India in December 2012, which it missed. However, post that a new government led by Prime Minister Nawaz Sharif came to power in 2013, which had said MFN will be given to India soon.

However, the high commissioner said normalisation of trade cannot be one-sided and it has to be based on a level-playing field and economic interdependence.

He said whenever two-way trade between both the countries has increased, there has been a “hardening of position” by the Indian government on the issue of Jammu and Kashmir dispute, even as he referred to the recent cancellation of talks between foreign secretaries of both the countries last year.

The foreign secretary level talks were supposed to take place in August last year. The decision was taken during a bilateral meeting between both Prime Ministers Narendra Modi and Sharif during the former's swearing-in ceremony in May last year. However, the meeting was called off by India in the wake of Basit’s meeting with Kashmiri separatists before the meeting was to take place in Islamabad.

“Let us admit that there is deep distrust in the two countries and it has a deep genesis in the Jammu and Kashmir issue. All issues such as Siachen, Sir Creek resulted from the Jammu and Kashmir dispute. So the question is can you put that on the back burner? Our experience tells us that no matter how hard we try in trade and cultural relations there is an inherent distrust … Bilateral trade cannot be continued beyond a certain point,” he said, adding Pakistan Prime Minister Nawaz Sharif has asked him to continue pursuing normal trade ties with India.

Bilateral trade between India and Pakistan reached $2.70 billion last financial year from $2.60 billion in 2012-13. In 2013-14, exports to Pakistan stood at $2.27 billion, up 10 per cent compared to $2.06 billion in 2012-13. However, imports from Pakistan declined by 21.22 per cent at $426.88 million in 2013-14 as against $541.87 million, according to data by the ministry of commerce and industry.

India and Pakistan had jointly decided to normalise bilateral trade between both countries in 2011. Under this Pakistan was to grant MFN status to India by December 2012. But it did not meet the deadline. However, in 2013, Pakistan had substantially reduced its negative list with India, which contains items that India cannot export to Pakistan. This allowed India to export over 7,500 items to Pakistan from 1,946 items earlier.