The Indian government on Wednesday formally allowed foreign direct investment (FDI) from Pakistan, the latest in a series of confidence building measures to build trust between the two nuclear-armed neighbours.
Pakistani citizens and companies will be allowed to invest in all sectors apart from defence, space and atomic energy, a government statement said.
The move to allow FDI from Pakistan had been announced by India’s trade minister earlier this year.
Both sides have implemented measures to improve trade and business ties, as they slowly rebuild relations that were shattered by the 2008 Mumbai attacks.
Under previous rules, Pakistanis could not directly invest in India. Investment flows are unlikely to surge after this initiative, but the move will go some way to addressing concerns by Pakistani businessmen that India places too many restrictions on them.