"The government has approved pruning of sensitive list to increase trade with SAARC countries," sources said.
Shifting of items from sensitive list to general category would do away with duty impediments and boost trade, according to officials.
Under the South Asian Free Trade Agreement (SAFTA), which came into force in July 2006, India's imports are classified under two lists-- the MFN list and sensitive list.
India's sensitive list for least developed countries (LDC) like Bangladesh has just 25 items. And the same for non-LDC like Pakistan has over 800 commodities.
It was proposed to cut 30 per cent of products under the sensitive list for non-LDCs under SAFTA.
According to an official, the decision would benefit Pakistan more than any other SAARC member.
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SAARC members consist of Nepal, Bhutan, Bangladesh, Pakistan, Sri Lanka, Maldives, Afghanistan and India.
India and Pakistan Commerce Ministers in April had agreed that discussions would continue at official levels to draw a roadmap for further reductions in the SAFTA-sensitive list.
In order to normalise trade with India, Pakistan had shifted from a small positive list regime to a negative list, which will facilitate trade in much more number (about 6,500) goods.