Opening New Opportunities of Investment Between India and Pakistan

Relationship between India and Pakistan has always been looked into Political terms and controversies around the policy. However, Indian Regulator issued new guidelines of Foreign Direct Investment related to India and Pakistan and certaily this initiatation may lead to more economic consolidation process of SAARC.

Reserve Bank of India (RBI) under  RBI/2012-13/198 A. P. (DIR Series) Circular No. 25 and  RBI/2012-13/173 A. P. (DIR Series) Circular No. 16 allowed "Overseas Investment by Indian Parties in Pakistan"and  "Foreign Direct Investment by citizen / entity incorporated in Pakistan".

In process of  Overseas Investment by Indian Parties in Pakistan, In terms of Regulation 6 (2) of the Notification ibid, “Notwithstanding anything contained in these Regulations, investment in Pakistan shall not be permitted.” It has now been decided that the overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route under Regulation 9 of the Notification, ibid.

Foreign Direct Investment by citizen / entity incorporated in Pakistan, In terms of sub-regulation (1) of Regulation 5 of the Notification ibid, a person resident outside India who is a citizen of Pakistan or an entity incorporated outside India in Pakistan, is not allowed to purchase shares or convertible debentures of an Indian company under Foreign Direct Investment Scheme. It has now been decided that notwithstanding anything contained in sub-regulation (1) of Regulation 5 of the Notification No.FEMA. 20, a person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under Foreign Direct Investment Scheme, subject to the terms and conditions specified in Schedule 1 of the Notification, ibid, provided further that notwithstanding anything contained in Schedule 1 of the Notification,  ibid, the Indian company, receiving such foreign direct investment, is not engaged or shall not engage in sectors / activities pertaining to defence, space and atomic energy and sectors/ activities prohibited for foreign investment.

Above Circular certainly consider as beginning of opening investment market between two countries and  same must lead to more equal opportunities of growth of business society of related country.