NEW DELHI: The government on Wednesday lifted a ban on investment from Pakistan, the only country that faced such curbs, in yet another effort to improve ties with its neighbours.

As was the case with Bangladesh, the department of industrial policy and promotion, which issued the notification, has mandated that investments by individuals and companies from Pakistan would need government approval. As a result, the Foreign Investment Promotion Board will approve proposals after it receives inputs from the defence and home ministries.

On February 15, TOI had reported that India had finally agreed to allow investment from Pakistan through the FIPB route .

The government has also said that investment in defence, space and atomic energy would not be permitted. The end of the ban on investment from Pakistan is the latest in a series of steps that the two neighbours have taken to improve economic and trade relations over the last 15 months.

Pakistan has agreed to grant most-favoured nation (MFN) status, a demand pending for the last 16 years, by the end of the year and has already moved from a system of positive list to negative list, which means barring a list of products, imports would be permitted. But even before the status is granted, India is expected to offer preferential access to several products from across the border.

In addition, talk on energy trade – electricity and diesel – are close to finalization.

As part of growing bonhomie, the two sides are now talking of a more liberal visa regime for businessmen, more trade through the land route, opening more points for trade and opening of bank branches.

Although the investment window has been opened, officials admitted, there is unlikely to be a queue given that the two countries haven’t had the best of relations in the last 65 years. In any case investment flows typically increase after trade rises. Trade between India and Pakistan is estimated at around $1.4 billion, although a lot of goods are routed via third countries due to restrictions maintained by Islamabad.

