India to allow foreign direct investment from Pakistan

India's trade minister says agreement to relax restrictions on visas for Pakistani businessmen almost ready.


Reuters April 13, 2012

NEW DEHLI: India has decided to allow foreign direct investment from Pakistan, India's trade minister said on Friday, hours before the two countries were due to open a trading post on the border in the latest sign of thawing economic ties.            

Liberalising heavily restricted trade and investment flows is now the driver of peace efforts between the neighbours, whose fragile ties were shattered when militants attacked the Indian city of Mumbai in 2008.

"India has taken an in-principle decision, as a part of the process to deepen our economic engagement, to allow foreign direct investments from Pakistan in India," said Trade Minister Anand Sharma at a news conference with his Pakistani counterpart.

Under current rules, Pakistani citizens cannot directly invest in India. Investment flows are unlikely to surge, but the move will go some way to addressing concerns by Pakistani businessmen that India places too many restrictions on them.

More than 600 Pakistani businesses are in New Delhi this week at a trade fair to promote their products to the Indian market.

In the face of some domestic opposition, the government of Pakistan President Asif Ali Zardari last November vowed to grant India most favoured nation status, which ends restrictions that require most products to move via a third country.

The move was hailed by India and the two countries are now focused on resolving economic issues before moving on to more intractable problems.

Sharma also said an agreement to relax restrictions on visas for Pakistani businessmen was almost ready.

Later on Friday, Sharma and the Pakistani trade minister, Makhdoom Amin Fahim, will open an expanded border trade terminal at Wagah, between Lahore and Amritsar.

With a capacity to handle about 600 trucks a day, the border crossing is expected to help bring trade to $8 billion annually from the current level of $2.6 billion, Indian industry chamber ASSOCHAM said in a study published this week.

COMMENTS (77)

Paretofp | 9 years ago | Reply

I agree with DKaimkhani, with two stock markets in close proximity investment in one could lead to the downfall of the other. Investment needs to be split or managed in order to act responsibly.

A R Khan Yusufzai | 9 years ago | Reply

If Western Europe can have a single currency after decades of enmity, why is it impossible for India and Pakistan?

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