A person who is a citizen of Pakistan or an entity incorporated in Pakistan may, with the prior approval of the Foreign Investment Promotion Board of the Government of India, purchase shares and convertible debentures of an Indian company under the foreign direct investment scheme, subject to the terms and conditions, the Reserve Bank of India (RBI) said in a notification today.
Hitherto, a resident of Pakistan or an entity incorporated in Pakistan were barred from purchase shares or convertible debentures of an Indian company under the FDI scheme.
However, such investments will not be allowed in sectors or activities, including defence, space, atomic energy etc where foreign investment is prohibited, RBI said in its notification.
The Indian government on 1 August announced its decision to allow foreign direct investment (FDI) from Pakistan, in a bid to bridge the trust deficit between the two countries.
The move to allow FDI from Pakistan had been announced by commerce 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.