India formally allows foreign investment from Pakistan

By AFP
Published: August 1, 2012
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Pakistanis will be allowed to invest in all sectors apart from defence, space and atomic energy. PHOTO: FILE

Pakistanis will be allowed to invest in all sectors apart from defence, space and atomic energy. PHOTO: FILE

NEW DELHI: India on Wednesday overturned its ban on foreign investment from neighbouring Pakistan, the commerce ministry said, in a move designed to build goodwill amid a renewed push for a peace settlement.

“The government of India has reviewed the policy… and decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India,” said a statement from the ministry.

A ban on investments in defence, space and atomic energy will remain and all propositions must be notified to the Indian government.

The decision to accept foreign direct investment from Pakistan was taken in April this year when the trade ministers of the nuclear-armed South Asian rivals met in New Delhi.

They also discussed ways to ease visa curbs on business travel and the possibility of allowing banks from both countries to open cross-border branches.

Pakistan said that Indian government’s decision to allow Pakistan’s direct foreign investment in India was “a positive step”.

India and Pakistan, which have fought three wars since independence, are channelling their efforts into “trade diplomacy” in a bid to build enough trust to tackle the more troublesome issues that divide them, such as Kashmir.

The improved relations between the rivals stem from Pakistan’s decision to grant India “Most Favoured Nation (MFN)” status by year end, meaning Indian exports will be treated the same as those from other nations.

In further progress, the neighbours opened a second trading gate in April along their heavily militarised border, boosting the number of trucks able to cross daily to 600 from 150.

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Reader Comments (32)

  • Aug 1, 2012 - 4:50PM

    Nawaz Sharif would be happy.

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  • Hedgefunder
    Aug 1, 2012 - 4:57PM

    Have they actually got any money in the first instance ?
    Secondly why? Its not the case that India lacks foreign investments from western nations, so why from these lot ?
    This coalition Govt has failed miserably to address the issues that concern the people of India in their dealings with Pakistan !

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  • Aug 1, 2012 - 5:02PM

    Excellent move!

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  • zK
    Aug 1, 2012 - 5:15PM

    Now that’s a step in the right direction…hope it brings prosperity to both the countries.Recommend

  • Aug 1, 2012 - 5:32PM

    @zK:

    Both the countries????
    One can now anticipate that industrialists/businessmen seeking migration b’cause of lawlessness and unsafe atmosphere in Pakistan, to Bangla Desh, Malaysia, Dubai, etc. will now prefer India. Surely India will offer a warm welcome, due to not one but multiple reasons.

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  • Syed Shah
    Aug 1, 2012 - 5:36PM

    I would want visa relaxation for common folks.

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  • Asad
    Aug 1, 2012 - 5:38PM

    @Hedgefunder: Why are you spending your much important time on ‘this lot’s’ news site all day long? obsessed much?Recommend

  • entropy
    Aug 1, 2012 - 5:41PM

    Which fool wants to invest in India? A plunging rupee and industrial output and soaring inflation, investment is pouring out of India as the Indian economy continues to crumble. You can’t build an economic miracle on the back of American propaganda.

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  • Indian
    Aug 1, 2012 - 5:55PM

    @Hedgefunder:
    Dude i fully understand your sentiments. But as Indians it becomes atleast a part responsibility of ours to stabilize Pakistan so that if Pakistanis have stake in India’s well being. Their business community will loose business if another incident like Mumbai happens which will make them force their government impose its writ on its citizens and behave responsibly. People earn money by doing business with/in India. So will Pakistanis. But that way we will atleast having someone on the other side of the border who will hold their Govt accountable. The current situation in Pakistan favours more extremism. The least we can do is encourage the sensibility on the other side. Otherwise, people like Hafiz Saeed will continue to exist in open air in Pakistan…..

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  • Hafiz Shah Ali
    Aug 1, 2012 - 6:01PM

    But both Pakistan and India need to execute Avoidance of Double Taxation treaty to respond to current times.The last full one was executed in 1947
    without a new treaty, very little mutual investments will be possible

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  • Lala Gee
    Aug 1, 2012 - 6:03PM

    The corrupt Pakistani moguls know that Switzerland and West is not safe now as they have enacted new strict laws against graft money laundering, so they are looking for other safe heavens. Indians who claim that Pakistan does not have money to invest, they have no idea how much money Pakistan Peoples Party and the Pakistan Plunder Party (name for all the corrupt politicians and bureaucrats) possess. It is so obvious when Pakistan is in dire need of FDI, the government of PPP is allowing to invest in the neighbor. Only PPP could have come out with such an innovative solution for the country’s development as they found a solutions for the electricity shortage by installing rental power stations at 3 times the cost of IPP’s when the real cause of the shortage was unavailability of funds. Jiaya Bhutto. Jiaya Zardari.Recommend

  • Sonam Shyam
    Aug 1, 2012 - 6:05PM

    Can’t say about the Pakistanis but surely Indian state guests in Pakistan like Dawood Ibrahim would now legally try to invest his illegal money in to India.

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  • Zalim Singh
    Aug 1, 2012 - 6:15PM

    good. more like safety deposit against terror attacks.

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  • Hedgefunder
    Aug 1, 2012 - 6:16PM

    @Indian:
    Yes, point taken, however do you actually think that Muppets in charge will ever listen to anyone ?

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  • asim
    Aug 1, 2012 - 6:21PM

    So they asking pakistan to open Indian market for investment?

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  • Its (still) Econonmy Stupid
    Aug 1, 2012 - 6:31PM

    The logic behind is that all the money coming in to bollywood to prop up Khans can now be taxed and accounted for. Taxation is prime reason. Killing Hawala business is important but secondary.

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  • Roy
    Aug 1, 2012 - 7:09PM

    This move makes very little economic sense. What is the real motive behind this? My guess is that this is a possible exit mechanism for the super rich in Pakistan to get out of the country fast if things spiral out of control in Pakistan(as it well could). By diversifying their assets and building business interests in India, they can move base to India quickly if needed and possibly apply for Indian citizenship if required(as all of them had parents or grandparents who were part of undivided British India). I really don’t think Pakistanis should be rejoicing with this news.

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  • LionOfPunjab
    Aug 1, 2012 - 7:14PM

    @Hafiz Shah Ali
    “..But both Pakistan and India need to execute Avoidance of Double Taxation treaty to respond to current times…”
    What double tax? Pakistani elites/industrialists don’t pay any taxes to begin with (lowest tax/GDP ratio in the world + bribe the income tax officials).

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  • C. Nandkishore
    Aug 1, 2012 - 7:18PM

    Smart move by India. Suppose a Pakistani Business starts a tyre business in India. India gets the plant and jobs. And a ready market because this gentleman from Pakistan will import tyres to Pakistan at a lower cost. India happy. Businessman happy. Pakistanis happy because they get tyres at a less expensive rate.
    In fact India should open special SEZs along the border for the Pakistani Businessman to open manufacturing units.

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  • Sapan Kapoor
    Aug 1, 2012 - 7:20PM

    India has always allowed Pakistan’s FDI in terror sector. Now the Indian government has extended it in other sectors as well.Recommend

  • Mr T
    Aug 1, 2012 - 7:53PM

    @Hedgefunder: Hahahahaha…. I think Pakistan should place a ban on Pakistan to invest money in india. Let’s not dirty our money. And oh yea, Pakistan has no involvement whatsoever in Mumbai blasts…Recommend

  • Avi
    Aug 1, 2012 - 7:57PM

    I’m entirely agree with sonam.

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  • gp65
    Aug 1, 2012 - 8:08PM

    @Syed Shah: “I would want visa relaxation for common folks.”

    Visa relaxation proposals were agreed between India and Pakistan. When the Indian home secretary came to Pakistan to sign these, Rehman Malik refused to sign saying that the Indian home secretary (who India had empowered to sign on its behalf) was not senior enough for Rehman Malik’s liking. HEnce the revised proposals were not signed.

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  • Pakistani Agnostic
    Aug 1, 2012 - 8:19PM

    So a Pakistani expatriate living in Riyadh (with properties in Dubai and Bahrain) can invest in Indian real estate or is it just for nationals living in the country

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  • Musthaq Ahmed
    Aug 1, 2012 - 8:28PM

    Here and now is buried the two nation theory for ever. Qaid-e-Azam suffered a decisive defeat. Pakistan must seriously find a ground for its existence else where. Sticking to old theme will find us in more comical situations challenging our sanity. Or we may throw a fit and reinvent ourselves as incurable fanatics.

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  • gp65
    Aug 1, 2012 - 8:57PM

    @Pakistani Agnostic: “So a Pakistani expatriate living in Riyadh (with properties in Dubai and Bahrain) can invest in Indian real estate or is it just for nationals living in the country”

    In the past while FDI from other countries was permiitted, FDI from Pakistan was not. This has changed. The sectors that Pakistanis can invest would be the same that any other foreigner could invest. I do not believe even other foreigners are allowed to invest in India real estate sector.

    @Roy
    If it is not economically viable for a Pakistani to invest in India they should not. They just have one additional option that they did not have before. In effect their menu of investment options has increased and there is no downside to that.

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  • Indian
    Aug 1, 2012 - 9:01PM

    @Hedgefunder:
    Yes, point taken, however do you actually think that Muppets in charge will ever listen to anyone ?
    Dude…. We simply don’t have an option….. These 2 countries put together form nearly 1.5 billion people!!!!! Now, the trigger happy Generals (imagine the Nukes) on the other side are waiting for one slip of patience from the Indian leadership which albeit its governance deficits and bureaucratic sluggishness is still behaving quite responsibly at-least in dealing with Pakistanis and their ‘Nonstate’ actors (they should actually be awarded for being the best villians of all time).
    Now the happy lives of a billion plus Indians is more important for us than the sad faces of 18 crore Pakistanis….. So, it will be painful and nasty but but we have to put it down our throat and go ahead and help them out of this…..
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  • Tariq Sohail
    Aug 1, 2012 - 9:08PM

    Wise move, I reckon both countries are heading towards a better working relationship in future.

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  • Mohammad Ali Siddiqui
    Aug 1, 2012 - 9:11PM

    Wait and see the response of Pakistanis investments in India.

    If RAW will be banned in India like the KGB was banned in Russia, I think that people from both the countries can think to take one more step in the positive direction.

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  • unbeliever
    Aug 1, 2012 - 9:48PM

    @Mohammad Ali Siddiqui:

    RAW definitely does not work in india…..it’s work area lies outside indian territory….

    and it’s not like agencies, that would help a political party in elections(or maybe, they are, but it simply isn’t in public domain, so i can’t tell)…..

    but what exactly do you want, an open field for agencies?Recommend

  • Naveen Singla
    Aug 1, 2012 - 10:05PM

    @Mohammad Ali Siddiqui:

    If RAW will be banned in India like
    the KGB was banned in Russia, I think
    that people from both the countries
    can think to take one more step in the
    positive direction.

    What plans do you have for ISI ? Will they limit themselves to running kindergartens ?

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  • Babloo
    Aug 2, 2012 - 3:17AM

    So has Tribune disabled the code that kept account of “recommended” posts ?
    That was very effective in gauging what most of the posters think.
    Disabling it is like exams, where every student gets the same mark, irrespective of merits. That would be detrimental.

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