The commerce ministry is in favour of lifting the ban on foreign direct investment (FDI) from Pakistan, now that a similar ban on Bangladesh has been lifted, according to minister of state for commerce Jairam Ramesh.
He said withdrawal of the FDI ban will encourage Pakistani entrepreneurs to invest in India and Indians to go to Pakistan. A similar ban on Bangladesh has been lifted.
?Bangladesh is now permitted to invest in India through the Foreign Investment Promotion Board (FIPB). The same should be applicable for Pakistan too,? Ramesh said.
He said there was pressure from Bangladesh to allow its investors to set up a manufacturing base in India, especially in the north?east, and export to Bangladesh as well as rest of the world. A Made-in-India tag would make it easier for Bangladesh entrepreneurs to tap the global market.
Ramesh said although there was no ban on Indian investment in Bangladesh, the government there was blocking it, contending that most of Bangladesh?s exports to India are made by Indian companies that had set up bases there before the tensions came into play.
India?s merchandise exports to Bangladesh added up to $2 billion and imports to $250 million 2006-07.
?Indian exports to Bangladesh were nine times more than what India imported from Bangladesh and this made a cause for the Bangladesh government to block Indian investment there,? Ramesh said. ?However, by allowing Bangladesh to invest in India such blockades are expected to be clear and the Bangladesh government may now give clearance to pending investment proposal like the Tata Group?s $3 billion investment,? Ramesh said.
India has also given clearance to allow duty-free imports of 8 million garment items from Bangladesh every year eliminating 185 tariff lines, which would increase Bangladesh?s exports worth of $ 70-80 million to India, Ramesh said.
However, such initiatives about Bangladesh makes a case for Pakistan investors to come and invest in India and the commerce ministry is deliberating on it, Ramesh said.