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Govt contemplates FDI from Pakistan
Oct '08
Government of India is considering allowing investments by Pakistan-based companies on a case-by-case basis.

The proposal follows the announcement made in New York by Prime Minister Manmohan Singh and Pakistan President Asif Ali Zardari to launch India-Pakistan cross border trade across the Line-of-Control. This trade is expected to commence from October 21.

However, at present investments from Pakistan are not allowed and have been placed in the negative list under the Foreign Exchange Management Act. It is only after the present political situation eases that the government will take up the proposal of allowing investments from Pakistan.

Although there are security concerns regarding these investments from Pakistan these can be handled on a case-by-case basis by the Foreign Investment Promotion Board (FIPB) though ofcourse such a move would encourage entrepreneurs from Pakistan to make investments in India.

Presently, direct investments by Indian entrepreneurs in Pakistan are also not permissible because the current situation in the country is not conducive. But a large number of domestic firms have expressed keen interest in making investments in sectors like IT. It has been reported that once investments are allowed, it would lead to increased trade flows between the two nations.

India's trade with Pakistan was $1.67 billion in 2006-07, an increase of 92.4 percent from $869 million in 2005-06.

Bangladesh is another country which has been removed from the country's negative list and is now being permitted to make foreign direct investments on a case-to-case basis. Most of the Bangladeshi businessmen investing in India are already exploring sectors like textiles and garments.

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