CANNES (Agencies) Indian Prime Minister Manmohan Singh on Friday welcomed Pakistans decision to grant Most Favoured Nation status to India but said it should have been done long ago. Better late than never. I welcome it, Singh told reporters here in this French coastal resort when asked about Pakistans decision to grant MFN status to India. He said, As one who believes that, rightly or wrongly, the destinies of countries in South Asia are very closely linked. I welcome the decision of Pakistan to grant us the Most Favoured Nation treatment. However, Singh felt this decision should have come long ago. I think it is nearly 17 years ago when India gave most favoured nation status to Pakistan unilaterally and Pakistan has taken so much time, Singh said. He went on to add that the Pakistans decision was a reflection within the Saarc context, countries can work together to realise growth potential. If this is a reflection of a new change, a new mindset, I welcome it. We have to watch, Singh said. Earlier, a senior Indian government source said on Friday Pakistan had backtracked since announcing earlier this week that it had granted India the status of Most Favoured Nation (MFN) in trade. 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. From the initial announcement of an unconditional grant of an MFN, there appears to be a clear backtrack, the source said. But, Pakistan on Friday denied that it had backtracked on giving India Most Favoured Nation (MFN) trade status. Pakistan is not backtracking, said foreign office spokeswoman Tehmina Janjua. Pakistan clearly stated that our cabinet gave approval to move forward on MFN status in principle, she said. Trade has long been tied to political issues between the hostile neighbours, who have fought three wars since independence from Britain in 1947. Wednesdays announcement was trumpeted on both sides as a milestone in improving fragile relations that were shattered after Mumbai attack in 2008. Lasting peace between the two countries is seen as key to stability in the South Asian region and help a troubled transition in Afghanistan as NATO-led forces plan their military withdrawal from that country. India and Pakistan may be home to some 1.4 billion people but bilateral trade flows are paltry - a legacy of mistrust between the neighbours. The hope is that an increase in trade will feed into wider trust between the two countries and help the rivals resolve major issues like the disputed Kashmir region. The two sides have also pledged to liberalise restrictions on business visas, curb non-tariff barriers and bolster trade on their land border. As things stand, exporters are forced to route many goods via third parties such as Dubai, slowing delivery times and upping costs. Less than one per cent of Indias merchandise exports are sold to Pakistan, in terms of dollar value, but in September a joint statement pledged to double bilateral trade flows within three years to about $6 billion.