The 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.
Pakistan was the only country in the negative list under the Foreign Exchange Management Act, or FEMA, which prohibits investing in India. The government removed Sri Lanka from the list in 2006 and Bangladesh in 2007
India and Pakistan have fought three wars since they broke from British colonial rule in 1947. Both sides have implemented measures to improve trade and business ties, as they slowly rebuild relations that were shattered by the 2008 Mumbai attacks.