Before the Indian central bank's statement on Friday, Indian entities were not allowed to invest in Pakistan.
Recently, India allowed Pakistani citizens and companies incorporated in the country to make investments in India in all sectors other than defence, space and atomic energy in the beginning of August. This announcement was followed by the reduction of items in the sensitive trade list by almost one-third besides the grant of permission to Pakistanis to buy shares in Indian companies.
The Reserve Bank of India had decided on August 22, 2012 that a Pakistani citizen may, with the prior approval of the Foreign Investment Promotion Board of India, purchase shares and convertible debentures of an Indian company, under Foreign Direct Investment Scheme.
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