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Asia

India allows direct investments from Pakistan

Pakistani traders have welcomed the Indian government's decision to allow foreign direct investment in India by Pakistani citizens and companies. However, experts are cautious about the implementation of this decision.

The announcement by the Indian government carries both economic and political benefits, say experts. The decision would not only enhance bilateral trade between the two rival nations, it would also ease political tension between the South Asian neighbors, they say.

India and Pakistan have fought three wars since their independence from the British in 1947.

On Wednesday, the Indian government overturned its earlier policy of banning Pakistani investments and announced that Pakistani citizens and companies could now make direct investments in India.

"A citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the government route, in sectors/activities other than defense, space and atomic energy," said a statement issued by the Indian Commerce Ministry Wednesday, August 1.

The ministry said that the decision would take immediate effect.

Mixed reactions

A Pakistani restaurant staffer distributing bread among the poor people

Pakistan's economy is already in a shambles

Iftikhar Ali Malik, vice president of the SAARC (South Asian Association for Regional Cooperation) Chamber of Commerce and Industry, hailed the Indian government's decision.

"The decision is beneficial for both India and Pakistan," Malik told DW, adding that the people of the two countries had suffered immensely under decades-old animosity. "The Pakistani capitalist class is ready to risk its money but the bureaucrats and government officials are creating problems. These people have nothing at stake," he added.

Another Pakistani investor, Aftab Ahmed Wohra, also welcomed the move; however, he said that Pakistani investors had already transferred their capital to Malaysia, Bangladesh and Sri Lanka. He said if the remaining investors took their money to India, it would be disastrous for Pakistan's local industry.

"No Indian would risk investing in Pakistan considering the political situation here. Indians are only investing in Pakistan's real estate sector," he said.

Pakistani Car manufacturer Nabeel Hashmi said the Indian government's decision was nothing more than a "political gimmick."

"Pakistani businessmen have to fill out hundreds of forms to get Indian visas, and even then they are allowed to travel to only few Indian cities. If Pakistani investors are not even sure about their visas, why would they risk their money?" he said.

Pakistani economist Qaiser Bengali also feared that Pakistan's direct investment in India would increase unemployment in Pakistan.

Political benefits

An Indian soldier takes cover as the Taj Mahal hotel burns during gun battle between Indian military and militants in Mumbai

The recent improvement in Indo-Pakistani ties is too fragile

Despite disagreements over the economic benefits of the Indian government's decision, most experts agree that it will promote peace between the two countries.

Indian journalist Ashok Kumar told DW that the decision would be helpful in normalizing Indo-Pakistani ties. "But let us not be too optimistic," he added. "Indo-Pakistani relations can easily be affected by terrorist attacks or something similar. We need to work on confidence building measures first."

Dr. Moonis Ahmar, professor of International Relations at Karachi University, said the decision to allow investments from Pakistan would "certainly improve relations between Pakistan and India because the economic stakes would facilitate increased people-to-people interaction between the two nations."

Ahmar cautioned that some people, both in India and Pakistan, are surely against promoting interaction in this way. "But if the civil societies and political parties of India and Pakistan support mutually-beneficial trade and investment," he added, "the warmongers can be defeated."

Author: Tanvir Shahzad / Shamil Shams
Editor: Sarah Berning

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