M A I N   N E W S

Govt nod to FDI from Pakistan
Finance Ministry okays proposal
Move to alter economic ties between the two countries
Ashok Tuteja
Tribune News Service

Pak demand Pakistan business community had been pleading with India for quite sometime to amend the rules and allow it to invest in India. But the proposal had been drawing stiff opposition from hardliners in India because of security issues.

Areas permitted Investments permitted in India under the government route in sectors/activities other than defence, space and atomic energy. FDI proposals from Pakistan are likely to be routed through the Foreign Investment Promotion Board (FIPB).

A major CBM New Delhi’s move on FDI from Pakistan is seen as a major confidence building measure (CBM) between the two countries ahead of External Affairs Minister S M Krishna’s visit to Islamabad in September for talks with his Pakistani counterpart Hina Rabbani Khar.

New Delhi, August 1
India today announced its decision to allow FDI from Pakistan in a move that is expected to radically change the dynamics of economic ties between the two countries.

It has been decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India under the government route in sectors/activities other than defence, space and atomic energy, an official statement by New Delhi said.

In order to address the security concerns, FDI proposals from Pakistan are likely to be routed through the Foreign Investment Promotion Board (FIPB). The government had earlier allowed investments from Bangladesh under the FIPB route.

The Commerce Ministry had sometime back sent a proposal in this regard to the Finance Ministry which has okayed it after carefully examining the issue.

The business community of Pakistan had been pleading with India for quite some time to amend the rules and allow it to invest in India. However, the proposal had been drawing stiff opposition from hardliners in India, especially because of security issues.

Pakistan does not have any restriction on allowing Indian investments. However, there have been no investments from India in Pakistan.

The first indication about India permitting Pakistani investments was given by Commerce Minister Anand Sharma during his visit to Pakistan in February.

New Delhi’s move on FDI from Pakistan is seen as a major confidence building measure (CBM) between the two countries ahead of External Affairs Minister S M Krishna’s visit to Islamabad in September for talks with his Pakistani counterpart Hina Rabbani Khar to review the progress in the dialogue process.

Pakistan, on its part, has also started taking measure to liberalise trade with India. It has drastically cut down the ‘negative list’ of items for trade with India, paving the way for granting the most favoured nation (MFN) status to India by the end of the year.

Ever since the two countries resumed the dialogue process in February last year, they have been taking steps to promote business and economic links. India had opened an additional check post at the Attari-Wagah border in April to permit the flow of more trucks carrying goods from Pakistan. A number of more cross LoC-CBMs in the field of trade are also on anvil between the two countries.

In fact, a liberalised visa agreement between India and Pakistan, which will facilitate easy travel for businessmen of the two countries, is lying ready for signature. Indications are that it would be inked when Krishna visits Pakistan.

Notwithstanding the dividends of trade for the two countries, India wants Pakistan to act against the perpetrators of the Mumbai attack. New Delhi is of the view that relations between the two countries can never become normal until Pakistan was seen to be taking steps to check the activities of anti-India elements operating from its soil.

Meanwhile, the business community in India welcomed the decision to allow FDI from Pakistan. Vikramjit Singh Sahney, president SAARC Chamber of Commerce and Industry (SCCI), described it as one of the strongest CBMs to improve bilateral relations. FIEO chief adviser Jagmohan Bhanot said India’s move would promote trade and economic ties with Pakistan.