The Hindu Business Line : Jairam Ramesh for removing ban on FDI from Pakistan

New Delhi, Feb. 8 The Minister of State for Commerce, Mr Jairam Ramesh, said that close on the heels of removing Bangladesh from the FEMA (Foreign Exchange Management Act) negative list and permitting foreign direct investment from Bangladesh into India through the normal FIPB (Foreign Investment Promotion Board) route, India should do a similar confidence-building measure for Pakistan as well.

In a communication to the Union External Affairs Minister, Mr Pranab Mukherjee, Mr Ramesh said that he is conscious of the security arguments but is quite sure that if FDI from Pakistan is also allowed on a case-to-case basis through normal FIPB route, these security concerns could be addressed.

He said that India’s case for pushing the Indian FDI into Pakistan is bolstered immeasurably if “we remove the ban on FDI from Pakistan into India”. He said that over time Indian investment in Pakistan would have an impact on bilateral trade flows to Pakistan’s benefit as it has in the case of Sri Lanka.

When contacted, Mr Ramesh told Business Line that before 2000 Sri Lanka’s imports from India was ten times higher than its exports to India. But with the advent of India-Sri Lanka free trade agreement and liberalised investment regime, Sri Lanka was able to step up its exports to India 4.5 times of what it used to do prior to 2000. Hence if we remove restrictions on FDI into Pakistan, bilateral trade volume would go and Pakistan’s fears of a huge trade deficit with India would get substantially addressed.

Mr Ramesh points out that so far the economic dimension of SAARC has been mostly about trade reflected in SAARC Free Trade Area (SAFTA). He said that India is now looking at investments and services as an extension to SAFTA.

“At a time when we are finalising an investment treaty in SAARC, such restrictions by any country really out of place. An initiative from India vis-À-vis Pakistan, would be an important unilateral gesture on our part”, Mr Ramesh said.

Bilateral trade volume between India and Pakistan had grown by 100 per cent from a level $850 million in 2005-06 to $1.7 billion in 2006-07.

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