ADDU: Pakistan would not backtrack on its decision regarding granting the most favoured nation (MFN) status to India, Foreign Minister Hina Rabbani Khar said on Wednesday.

“Let me categorically say that I don’t see a lot of room for confusion,” the Press Trust of India quoted her as saying, rejecting speculation on the Nov 2 decision to grant the status to India.

“We will not backtrack on a cabinet decision,” she told the news agency ahead of a summit of South Asian Association for Regional Cooperation (Saarc) which opens on Thursday in the Maldives.

Khar said the special designation was part of efforts to normalise ties between the neighbouring countries.

“I can tell you categorically that the cabinet gave its approval for normalisation of trade ties with India,” she added.

Talking to reporters in the Maldives, Khar said the environment had improved considerably ahead of the talks between Prime Minister Yousuf Raza Gilani and Indian leader Manmohan Singh, scheduled on the sidelines of the summit for Thursday.

“The trust deficit that typically existed between the two countries for many, many years has been reduced to a large order,” she said.

Khar said Pakistan would like “the trust deficit that (has existed) between the two countries for many years to be reduced...“We have many, many long miles to move ahead still, and we hope that this cooperation, with mutual trust more thananything else,... we will be able to move on.”

Khar said the discussions to be held between Pakistan and India were also expected to focus on regional terrorism.

She said the threat of terrorism was a challenge to both countries and would be addressed by leaders at the summit.

“Nobody can deny the fact that this is a major challenge the region faces. Pakistan is a country that has suffered at the hands of terror more than any other country may (have) in the region or in the world.”

Any issue that was a challenge to the region or to the two countries could be discussed, she said.

As he flew to the Maldives, Indian Foreign Minister S.M. Krishna also referred to a “very positive atmosphere” between the two countries and said the “trust deficit” with Pakistan was shrinking and they should now look at a “joint strategy” to fight terror.

“I think our relationship with Pakistan is becoming a little more stable than it was earlier,” he said, according to PTI.

Both the foreign ministers said the trust had improved, providing the foundation for a renewed push at the peace process.

They also spoke optimistically of the improvements in ties achieved during talks over the past months. The MFN status willremove discriminatory higher pricing and duty tariffs that stand as barriers to export between the neighbouring countries, but non-tariff barriers continue to stand in the way of boosted trade, analysts say.

The bilateral peace dialogue — suspended by India after the 2008 Mumbai attacks — was resumed in February.

The two sides have slowly rebuilt their ties through a series of summits and talks.

An Indian military helicopter which strayed into Pakistani territory last month was promptly released along with its crew and returned to India, avoiding what in the past could easily have escalated into a diplomatic row.