India and Pakistan agree to normalize trade ties

India and Pakistan have agreed to normalize bilateral trade, signifying a gradual thaw in relations between the bitter rivals.

Indian Commerce Secretary Rahul Khullar said Tuesday that Pakistan has agreed to name by early next year a small list of items that India cannot trade in with its South Asian neighbor. He said both sides hope to do away with the list by the end of next year.

Two weeks ago, Pakistan agreed to give India the "Most Favored Nation" status. Granting the status means the two countries can trade on equal terms, typically giving each other low tariffs and high import quotas.
India gave Pakistan MFN status in 1996.

The World Bank estimates annual trade between India and Pakistan is around $1 billion and could grow to as much as $9 billion if barriers are lifted.