14.4.12

India & Pakistan trade initiatives



The horizon in the neighbourhood appears to be brightening. For the first time ever, India decided to allow foreign direct investment (FDI) from Pakistan — a step that signals growing warmth in the relations between the two nuclear-armed neighbours. Until now, Pakistan was the only country from where FDI was not allowed. The decision to allow FDI may not lead to an immediate rush of investments from Pakistan, but it does show that the two sides are now eager to do business and significantly raise the level of trade and economic engagement between them. Officials had earlier said that after the rules are amended, investments can come through the foreign investment promotion board (FIPB) route into sectors where foreign investment is allowed. FIPB has representatives from all ministries, including home, and scrutinizes proposals which are referred to it. Initially, companies will prefer trading. Right now, the focus is on trade and sectors like tourism, education, health and hospitality.

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