Pakistan has backtracked since announcing earlier this week that it had granted India the status of Most Favoured Nation (MFN) in trade, a senior Indian government source said on Friday.
The MFN status would help normalise trade relations between the two nuclear-armed rivals by ending heavy restrictions on what India is allowed to export across the border. New Delhi granted its neighbour such a status in the mid-nineties.
Business and political lobbies in Pakistan appear to have forced the move to be put on hold, leaving India to wait and watch as to when the process would resume, the source told Reuters on condition of anonymity.
From the initial announcement of an unconditional grant of an MFN, there appears to be a clear backtrack, the source said.
Trade has long been tied to political issues between the hostile neighbours, who have fought three wars since independence from Britain in 1947.
Wednesday's announcement was trumpeted on both sides as a milestone in improving relations.
(Reporting by Matthias Williams; editing by Malini Menon)