New Delhi: In a major decision, India on Wednesday allowed investment from Pakistan paving way for Islamabad to normalise bilateral economic ties by implementing much-delayed Most Favoured Nation (MFN) status for New Delhi.
"The Government of India has reviewed the policy...And decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India," the Commerce and Industry Ministry said in a press note.
However, strategic sectors of defence, space and atomic energy have been kept out of foreign direct investment (FDI) from Pakistan, it said.
Also, the FDI proposals from the neighbouring country would need clearance from the Foreign Investment Promotion Board (FIPB).
Hailing the decision, the Indian industry said that Pakistani businessmen can explore sectors like cement, textiles and sports for investments in the country.
"It is a great decision...Now Pakistan should also implement the MFN status to India," Ficci Secretary General Rajiv Kumar said.
SAARC Chamber of Commerce & Industry President Vikramjit Singh Sahney termed the decision as one of the strongest confidence building measures to improve bilateral relations.
"Pakistan should also take similar steps and allow Indian businessmen to invest in their country," CII Director General Chandrajeet Banerjee said.
Although Pakistan had notified granting the MFN status to India in March this year, it is yet to implement it fully, amidst reports of pressure from hardliners.
However, Pakistan had partially liberalised its trade regime with India in March when it shifted from positive list rules to negative-meaning barring 1209 items Islamabad would allow import of all other Indian goods.
Analysts feel that today's decision would help the Pakistan government to convince the MFN opponents about its trade bargains with India.
India had granted the MFN status to Pakistan way back in 1996 which means that Islamabad will give treatment to Indian imports at par with its other trading partners.