'Govt to allow FDI from Pak'
India is actively contemplating changes in the Foreign Exchange Management Act (FEMA) to allow foreign direct investment (FDI) from Pakistan in a move expected to significantly improve bilateral trade relations.
"India has taken in-principle decision as part of trade normalisation process to allow FDI from Pakistan...," Commerce and Industry Minister Anand Sharma said after a meeting with his Pakistani counterpart Makhdoom Amin Fahim.
The Department of Industrial Policy and Promotion (DIPP) has sent a proposal to finance ministry for changes in FEMA. At present, Pakistan is the only country covered by the FDI restrictions related to the FEMA. "Procedural requirements (for FDI from Pakistan) are underway. It will be notified soon," Sharma said. Talks are also on to allow banks from both the countries to open branches in each other's territory, he said. "RBI and State Bank of Pakistan are in favour of opening branches," Sharma added.
"There has been progress in allowing banking services from both sides. In-principle we have agreed," Pakisatani Minister Fahim said. In order to address the security concerns, FDI proposals from the Pakistan can be routed through the Foreign Investment Promotion Board (FIPB) which is headed by economic affairs secretary in the finance ministry, the official said.
Courtesy: Hindustan Times
Big trade waiting to happen
After years of distrust, India-Pakistan trade ties saw a rollercoaster ride since last April when the commerce secretaries of the two hostile neighbours met to normalize trade relations. Since then several initiatives have been announced by both governments and now, the baton has been passed on to the business communities of the two nations to boost bilateral trade from the current level of $2.7 billion.
The sharp turnaround in trade relations was triggered by Pakistan's decision last month to move closer to granting to India the most favoured nation status. Pakistan published a negative list that will restrict import of only 1,200 items now, compared to the previous list of over 1,900 products. Pakistan has also promised to phase out the negative list by year-end . This is expected to be a huge boost to business and help shut out third country trade between the two countries, estimated at $10 billion.
In a period of 51 weeks, both nations have taken a series of steps for deeper economic engagement. Commerce ministers have met and agreements have been signed to remove some trade barriers. Trade shows were held in each other's territory and there are plans for an India-Pakistan Joint Business Council to foster deeper business ties.
An ambitious agenda is on the cards for the months ahead. The easing of visa rules for business travel is expected soon while talks are on for trade in electricity and diesel. Central banks of both nations are negotiating on opening branches while talks continue to identify new land routes for trade. Negotiations are expected on cooperation in tourism, healthcare and hospitality. Businessmen on either side are excited about the prospects for trade but admit that more ground needs to be covered for normal trade ties between the nuclear-armed neighbours. Private sectors of both nations need to work closely to strengthen efforts of the two governments.
"Big trade is waiting to happen. Both sides will benefit . We have the support of both governments and we have big business plans," Sheikh Muhammad Muneer, president of the India-Pakistan Chambers of Commerce and Industry told TOI. Experts agree the next stage should focus on linkages between industry sectors. "We should look at setting up intra industry ties to build scale, for instance, in textiles, to ward off competition from China ," said Rajeev Kumar, FICCI's secretary-general .
Businessmen say exploring joint ventures to strengthen the normalization process should be next on the agenda. "Once trade channels are opened, we would see investments from both sides. Our countries are similar in customer needs, making it that much easier to do business," said Onkar S Kanwar, chairman of Apollo Tyres.
"We have come a long way, and in the next few years will be able to move to the next level. Music, films and sports are fabulous starts. People-to-people exchanges increase trust in each other. If we can undertake greater business dealings with each other, it will truly add value," said Kanwar.
Courtesy: The Times of India
Monday, May 07, 2012
Page 188 of 174
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