After dragging its feet for almost four months,the finance ministry has agreed to amend the Foreign Exchange Management Act (FEMA) to allow foreign direct investment from Pakistan into India. Citing security concerns,FEMA currently bars investments from Pakistan,the only country to be singled out.
Commerce told Finance about its Pak FDI proposal last October,but there was no word from the latter until last week. On April 13,after a meeting with visiting Pak federal minister Makhdoom Amin Fahim,Commerce and Industry Minister Anand Sharma announced an in-principle decision to allow Pak business to invest in India.
We have now given our no-objection to the proposal. The secretary,Department of Economic Affairs, has written a letter to the commerce secretary on April 18 ssuring that the requisite amendment (to FEMA) will be made soon, an official confirmed to The Indian Express.
Last weeks meeting was the third between the two nations in seven months,a clear indication of the thawing of relations after the freeze that followed the 2008 Mumbai terror attacks.
Allowing FDI from Pakistan is expected to go a long way in strengthening economic ties between the two countries though the likelihood of investments going up is bleak.