SME Times News Bureau | 02 Aug, 2012
In a major confidence-building step that will boost economic
ties between the two nuclear-armed neighbours and accelerate the pace of
regional integration, India Wednesday announced changes in its long-standing
regulations to allow investments by Pakistani firms and individuals.
The Department of Industrial Policy and Promotion (DIPP) issued a circular
making changes in the Consolidated FDI Policy to allow investments from the
neighbouring country.
"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, under the government route, in sectors/activities other than defence,
space and atomic energy," said an official notification issued by the
DIPP.
Pakistani investments are allowed with immediate effect, it said.
All investment proposals must be routed through the Indian government.
The clearance of Pakistani investments has created a positive tone for the
forthcoming visit of External Affairs Minister S.M. Krishna to Islamabad next
month and comes despite the lack of adequate action by Pakistan against the
26/11 terrorists.
Pakistan was the only country in the negative list under the Foreign Exchange
Management Act (FEMA), which forbids investing in India. Sri Lanka was removed
from the list in 2006 and Bangladesh in 2007.
The decision to allow foreign investments from Pakistan follows a roadmap
chalked out by trade and industry ministers of India and Pakistan in April.
The two neighbours, who have fought three wars over territorial claims in Jammu
and Kashmir and continue to differ on terror, have been following a new
strategy to put economic relations at the forefront of their relations in the
hope of creating a conducive atmosphere for resolving contentious issues.
The latest Indian decision reinforces Pakistan's decision to grant this country
Most Favoured Nation, setting the stage for improved economic engagement
between the two countries.