Trade relationships between India and Pakistan will soon normalize as bilateral ties have been improved by Pakistan granting India the status of "most favored nation". This decision has been long awaited by Indian businesses since India granted the same status to Pakistan in 1996.

Trade between the two South Asian countries has been subject to political hostilities and terrorist attacks for decades. However, now Pakistan will give Indian exporters lower tariffs and less trade barriers once the new trade agreement is implemented. This move towards increased trade between the two nations will boost the economy in both countries. Currently, the India-Pakistan trade is valued at USD 2.6B and is expected to double or triple within the next five years. Another factor into this equation is that presently India exports to Pakistan through Dubai. Once the MFN agreement is in place, trade will go directly from India to Pakistan, practically eliminating trade through Dubai. Furthermore, consumers in Pakistan will benefit from the change as they will be able to purchase Indian goods for a lower price.

The Pakistani cabinet has approved to move forward on M.F.N. status in principle, but it will take a while until the agreement is fully implemented. The governments of the two countries are aware that there will be some hurdles on the way, including the negative list that Pakistani government is compiling for goods that India will not be able to export.

Negotiations are still in process; therefore it is difficult to quantify potential benefits. However, this is a move in the right direction and will tremendously improve diplomatic relationships between the two nations.

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