The Centre has given the green signal for Foreign Direct Investments (FDI) from Pakistan and treating it on a par with such investments from Bangladesh.
“Since they were similarly banned, we had to give Pakistan what we already gave to Bangladesh,” official sources told Business Line.
Currently, a Bangladeshi citizen or an entity incorporated there is allowed to invest in India with the Foreign Investment Promotion Board's (FIPB) approval. The FDI policy permits Indian companies to issue employee stock options to Bangladeshi citizens, also with the FIPB's nod. These norms for Bangladesh will now be applicable to Pakistan too. The FIPB clearance is also meant to take care of security concerns.
The Commerce and Industry Minister, Mr Anand Sharma, had on April 13 said that India has, in principle, agreed to allow FDI from Pakistan, adding that procedural details would be notified soon.
The changes were to be announced at the India-Pakistan Commerce Secretary level meeting slated for May 2-5, but the meeting was postponed and a new date is yet to be fixed. The Department of Industrial Policy and Promotion and the Finance Ministry are also considering if the notification on changes in the FDI policy should precede changes in Foreign Exchange Management Act, or vice-versa.
Non-discriminatory
The delay in the notifications was affecting the progress of negotiations among the South Asian countrie towards agreements on services trade and investment. Pakistan questioned how India could push for liberalisation of services and investment in South Asia when New Delhi was yet to accord non-discriminatory treatment to Pakistan on FDI. Meanwhile, on Friday, Mr Sharma said during a CII function that India has allowed investments from Pakistan and opening up of Pakistani bank branches in India. He said South Asian economic integration will be possible only when India and Pakistan partner to bring peace and prosperity in the region. Speaking at a FICCI function, he said the Government will allow investments from Pakistan, “whatever is the amount”, to flow into India.