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6) Withdrawing MFN status of Pakistan by India will have little intended  impact. Analyze.(250 words)

Topic– India and its neighborhood- relations.

6) Withdrawing MFN status of Pakistan by India will have little intended  impact. Analyze.(250 words)

The hindu

Why this question

The recent attack on security forces in Kashmir highlights the instability in the region and the role of external threats. In retaliation India has decided to withdraw the MFN status of Pakistan. It is therefore important to discuss the effectiveness of such a measure in terms of the desired effect.

Directive word

Analyze-here we  have to examine methodically the structure or nature of the topic by separating it into component parts, and present them as a whole in a summary.

Key demand of the question.

The question wants us to dig deep into the issue of India’s withdrawal of MFN status of Pakistan and bring out as to why it will only have a little desired impact on the trade relations between the two countries.

Structure of the answer

Introduction– write a few introductory lines about the decision of India to withdraw MFN status of Pakistan and mention about the Pulwama attack.

Body-

Discuss why withdrawal of MFN status will have limited impact. E.g

  • It does not strictly fall under the ‘beggar-thy-policy’, often used in international trade through which one country tries to resolve its economic problems by means that worsen the economic problems of its neighbours or trade partners.
  • Trade now takes place using three channels: the official route; the illegal (informal) route, through smuggling along porous India-Pakistan land borders and also Afghanistan, which may not be accounted for in the national income; and lastly, through mainly Dubai and Singapore, which have free ports and accommodate legal agents of traders from India and Pakistan.
  • Traders carry out informal trade between Pakistan and India through the exchange of goods at the border as well as through the personal baggage scheme’ through “green channel” facilities at international airports or railway stations.
  • ‘Informal trade has also taken place through Afghanistan where goods are exported officially from India and later smuggled into Pakistan.
  • Also, under the South Asia Free Trade Area Agreement (SAFTA) 2004, Pakistan’s share in external trade is less than 10%, while India’s share is more than 70%.
  • Such steps may propel Pakistan to look for new markets beyond SAFTA, corroborated by the recent meeting held with Saudi Arabia and growing prospects of trade through a third country, mainly via Dubai etc.

Conclusion- based on your discussion, form a fair and a balanced conclusion on the given issue.