Pakistani and Indian flag — File Photo
Pakistani and Indian flag — File Photo

KARACHI: India has opened up its doors to Pakistani citizens and entities incorporated in this country to invest in shares and convertible debentures of an Indian company under the Foreign Direct Investment Scheme.

According to a circular released by the Reserve Bank of India (RBI) on Wednesday and a press release issued by the Indian High Commission in Islamabad on Friday, such investment would have to be made after prior approval of the Foreign Investment Promotion Board of the Government of India. It will also be subject to certain terms and conditions.

“The Indian company, receiving such FDI, must not be engaged in sectors/activities pertaining to defence, space and atomic energy and sectors/activities prohibited for foreign investment,” the RBI said.

The move comes quickly on the heels of the Aug 1 decision by the Indian commerce ministry that overturned a ban on foreign investment (in industrial ventures) from Pakistan, permitting a citizen or entity from Pakistan to make such investments in India.

The decision to accept the FDI from Pakistan was taken in April this year when the two trade ministers met in New Delhi and was thought to be in response to Pakistan’s decision to grant India the `Most Favoured Nation (MFN)` status by the end of the year.

Traders and investors on this side of the border were glad over the second step in ‘trade diplomacy’ in a single month as they believed it would help tackle troublesome issues such as Kashmir which has soured relations between the two countries, since their creation 65 years ago.

A senior stock broker, however, thought the Indian decision to be “symbolic”.

He did not expect an imminent rush of funds to equity markets on the other side of the border.

The Managing Director of Karachi Stock Exchange, Nadeem Naqvi, however, commented that the decision by RBI to allow investment in shares and debentures of Indian companies was a welcome step. He said that it was a natural evolution of the thawing of relations between the two neighbours where the potential for bilateral business and investment relationship was huge.

An industrialist said: “Now that India has permitted Pakistani nationals and corporates’ investment in industrial ventures and equity markets, everyone looks forward to the RBI to remove a Pakistan-specific regulation that bars Indian companies from investment in Pakistan.”

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Comments are closed.

Comments (14)

Raghav
August 25, 2012 11:25 am
TYPICAL BUREAUCRATIC DELAYS ARE KNOWN AS RED TAPE IN INDIA.
Sehr Sehrish
August 25, 2012 8:13 am
Chalo g ab Pakistan ki rhi sahi economy bhi gai....
Fatima
August 25, 2012 8:22 am
Red tape means?
sanhita1
August 25, 2012 9:21 am
tough and rigid bureaucratic rules and regulations
sanp11sanp11
August 25, 2012 9:21 am
Tough and rigid bureaucratic rules and regulations.
Rashid Sultan
August 25, 2012 10:00 am
Let the brokers worry about the process. If you have the money, invest.
dsfdsf
August 25, 2012 11:20 am
Read this : http://en.wikipedia.org/wiki/Red_tape
Dr satpal Jabbal
August 25, 2012 7:37 am
Try to start purchasing, then you will see the Red Tape. This is not for common investors.
Binod
August 25, 2012 10:28 am
bureaucracy (babus and their rule book )
p r sharma
August 25, 2012 8:20 pm
Red tape means- hurdles.( approval from FIPB ( Foreign Investment Promotion Board ) will be required and not by any govt dept, . Permission shall be be easily given for stake within the permissible limit probably maximum at 26% equities. permission is for direct investment through a Pakistani company only and not for individual investors. i do not know if the Indian companies are permitted by Pakistan to invest in their companies. Pakistan can expect a sizable amount of investment from Indian side if allowed, Once Pakistan extends MFN status to India ( India has already given this status to Pakistan long back) There can be trade directly between the countries . Now the Indian goods are imported in Pakistan through Gulf countries which increases their cost at Pakistan.
Mehraj
August 26, 2012 10:29 am
India gave that to Pakistan in 1996.
yuvraj vats
August 26, 2012 7:49 am
hehehe.. superb
Fatima
August 25, 2012 8:21 am
good Luck to both Countries For Better future
kamran
August 26, 2012 9:30 am
Mr sharma in the 5th Para it states The decision to accept the FDI from Pakistan was taken in April this year when the two trade ministers met in New Delhi and was thought to be in response to Pakistan’s decision to grant India the `Most Favoured Nation (MFN)` status by the end of the year. However i dont think india has given pakistan MFN status as of yet.
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