NEW DELHI: In a major step that would boost trade between otherwise arch rivals South Asian countries India and Pakistan, the Indian government on Friday took a decision to allow Foreign Direct Investment (FDI) from Pakistan to help set up businesses here. The decision was taken during a meeting between India's union Commerce and Industry Minister in the Anand Sharma and his Pakistani counterpart Makhdoom Amin Fahim said after a meeting in New Delhi on Friday. “India has taken an in-principle decision as part of trade normalization process to allow foreign direct investment from Pakistan… Procedural requirements (for FDI from Pakistan) are under way,” Sharma told media persons after the meeting. Currently, trade between India and Pakistan are frequently called off due to the frequent diplomatic tensions between the two countries. Only of late has the trade been liberalized. Several Pakistani industries and banks are keen on setting up business in India, which is possible only when a policy decision on allowing cross-border FDI is taken. A major beneficiary of the two countries will be banks on either side which are eager to open branches in each others' countries. “Besides, talks are underway to allow banks from both the countries to open branches in each other's territory,” he said, adding, “RBI and State Bank of Pakistan are in favor of opening branches…There has been progress in allowing banking services from both sides. In-principle we have agreed,” Fahim said. Pakistani President Asif Ali Zardari recently visited India on a private visit in which he also informally met the Indian Prime Minister sparking off renewed friendship between the countries. Businesses on both sides now plan to set up the India-Pakistan Business Council to be co-chaired by both countries. The two sides are also seeking to make travel between the two countries easier with multiple entry visas.
