Pakistan seeks to lift ban on Indian investment


Pakistan and India, which have imposed ban on investment in their countries from both sides, are likely to allow or facilitate ‘joint ventures’ as the first step to enhance trade ties. Joint ventures not to harm domestic industry
Pakistan, which is reluctant to give the Most Favored Nation (MFN) status to India, has no objection over the joint ventures and ‘case to case investment’ in the country, sources in the Ministry of Commerce said. Though, Islamabad, has expressed reservations over investment by Indian companies in Pakistan as it could harm comparatively less competitive local industries, a joint investment by both Pakistani and foreign companies would not endanger the local industry, they added.
The concerned authorities, trade bodies and associations, have also suggested the ministry that the government should consciously relax the conditions on Indian investment. In various proposals forwarded to the ministry by these organizations, it was also cleared that there would be no harm to the indigenous industry if an industry was established by both Pakistani and Indian companies, having 50 per cent share by each party. India to remove trade hurdles The suggestions, sources claimed, were made on the eve of the 5th round of Talks on commercial and economic cooperation between the commerce secretaries of India and Pakistan, held on 27 -28 April 2011 where the secretaries had discussed trade promotional options.
A Pakistan based trader, Sheikh Amjad Rashid, who had visited India recently, also told Pakistan Today that the Indian trade minister, has also assured to support the joint ventures in both countries and the ministry would also remove hurdles in this regard.
On the other hand, he claimed, the Secretary Commerce, Zafar Mehmood, has also made it clear that the ministry would support the joint investment by the two parties. However, as there is still uncertainty about relations between the two neighboring countries, having tense political relations in the last 60 years, the investment of an Indian company in Pakistan and vice versa, would at least lower the risk of losses.

Trade delegation
scheduled to visit India

According to sources, a high power trade delegation was also scheduled to visit India in November this year for further strengthening of trade ties while exploring new opportunities of trade and investment.
Under the proposed investment setup, sources said, “An investor will automatically hold the share of the foreign investor, in his/her country, if his own share of business was threatened/lost in the foreign country, as a result of any hostility in Indo-Pak relations.” These conditions, they said, would not only pave way to enhance the trade ties between the two countries but also lower the chances of further hostility. There are many sectors, in both countries where joint ventures and case to case investment are possible. Besides the investment issue, being the signatory to WTO Pakistan should also grant the MFN status to India as contrary to the popular view; MFN does not mean giving special treatment to imports from another country. MFN refers to nondiscrimination among goods or services imported from other member countries and simply removing discriminatory practices in international trade, sources viewed.
At the same time, India should also reduce tariff rates which remain high, especially for goods of particular interest to Pakistan, such as textiles, leather, and the mineral onyx, and non tariff barriers are substantial. The volume of bilateral trade between India and Pakistan has declined from $3.5 billion to $1.8 billion, and both the governments have now shown willingness to remove trade barriers in order to enhance economic and trade co-operation between the two states.