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India may withdraw Most Favoured Nation status for Pak

27 September 2016

Pressing on with its tough position against Pakistan after the Uri terror attack, India will now decide whether to withdraw its Most Favoured Nation trading status. Prime Minister Narendra Modi has called a meeting with top officials on Thursday for a review of the relations.

On Monday, the PM consulted with National Security Adviser Ajit Doval, Foreign Secretary S Jaishankar and other top officials to discuss whether a reconfiguration of the Indus Waters Treaty with Pakistan was among the steps that the government should take as a response to attacks from Pakistani soil.

"Blood and water cannot flow together," the PM had said in the meeting. Sources say the government has kept its option of reviewing the treaty on the sharing of the waters of six rivers with Pakistan open.

India is debating a series of steps to tighten pressure on Pakistan after the 18 September attack on an Army base in Jammu and Kashmir's Uri, in which 18 soldiers were killed by terrorists India says were from the Pakistan-based Jaish-e-Mohammad.

The 'MFN' status was accorded to Pakistan in 1996 under WTO's General Agreement on Tariffs and Trade (GATT). Both India and Pakistan are signatories to this which means they have to treat each other and rest of the WTO member countries as favoured 'trading partners'. Bilateral trade between the two nations, however, stood at just 0.4 per cent of India's overall goods trade.

If the government withdraws the move, the impact will be mainly symbolic because bilateral trade between the neighbours represents a fraction of India's overall goods trade.

Calling out Pakistan's serial use of terror attacks in India and its role in inciting the worst violence in several years in Kashmir, External Affairs Minister Sushma Swaraj yesterday warned that Islamabad must "abandon this dream" about using terror attacks to "obtain territory it covets."

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