India and Pakistan will make fresh attempts to expand and deepen trade ties. As

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part of these efforts, the two will re-engage for granting India Most Favoured Nation (MFN) status.

As a first step, India has asked Pakistan to move towards drawing up a small negative list of prohibited items as against present system of listing out items that are open to trade. “This will make available larger basket of items that can be traded by both sides,” said a source.

The move to expand trade ties figured prominently during foreign secretary Nirupama Rao’s visit to Islamabad earlier this week, official sources confirmed. Rao held discussions with Pakistani leadership on several issues to normalize relations between the two countries and draw up a comprehensive plan to fight against terrorism in South Asia region.

Commerce Secretary Rahul Khuller may travel to Pakistan shortly and hold discussion with his counterpart. Planning Commission estimates have put the potential for bilateral trade at t$ 10 billion. Full-blown trade and investment relations between India and Pakistan will take the economic profile of South Asian region to next level.

“Pakistan is very keen to re-engage with India on granting MFN” an official source confirmed. India has already granted MFN status to Pakistan allowing the country to export 1934 items.

However, sources confirmed that no dates have been set for commerce secretary’s visit to Pakistan. Interestingly enough the initiative to expand trade and investment ties came from Pakistani leadership to which India has responded positively.

Foreign secretary’s visit and Home Minister P.Chidambaram’s consultations with Pakistan’s interior minister Salman Malik seem to have given fresh hopes of reviving full dialogue between India and Pakistan, sources said.

On terrorism, there seems to be some realization on part of Pakistani leadership that it was not just India-centric problem, sources stated. The two sides have apparently explored possibility of setting up joint counter-terrorism structures.

India is also assessing the proposal mooted by Pakistan to resume full dialogue at the level of foreign ministers. “No decision, agenda or calendar is ready for such dialogue as of now” said the source.

During foreign secretary’s visit, apparently, Pakistan has conceded having difficulties in bringing those responsible for Mumbai attacks to justice. Further, India has apparently expressed its concerns developments in Afghanistan where some pro-Pak elements have apparently mounted an anti-India campaign across the borders.

Indian government has pointed to development projects, its nationals working in the troubled nation and humanitarian assistance being provided. “We have expressed our concerns vis-à-vis cross border terrorism in Afghanistan where we do have a stake” said sources.

The two back to back visits by foreign secretary and home minister may lead to removing ‘trust deficit and vision deficit’ on tackling issues.

Meanwhile, Indian establishment seems to have taken notice of increased Chinese presence in Afghanistan especially on commercial projects like mining mineral and metal resources. “China looks at Afghanistan in a different way and our USP is different as we have diverse interests and take active part in development of Afghanistan” said an official source.