"Now that India has allowed investments from Pakistan and has also removed roadblocks for Indian investments into the country, the time is right for a bilateral investment pact," a commerce department official told ET. Indian commerce secretary SR Rao will meet his Pakistani counterpart Munir Qureshi for a two-day meet to build on the economic liberalisation programme that the two countries started last year.
New Delhi will also make a case for increased trade through the land route and take stock of Islamabad's plans of dismantling the list of banned items from India and extending it the most favoured nation status by the year-end as planned.
India recently removed Pakistan from the negative list under the Foreign Exchange Management Act, making way for Pakistani investments. The finance ministry also issued a notification enabling Indians to invest in the neighbouring country. Pakistan does not have any restrictions on investments to and from India.
"There is, however, a lot of discomfort and distrust that still remains between the two countries that may hamper flow of investments. A bilateral investment pact will help in confidence building," the official added.
The two secretaries are expected to announce a time-frame, preferably a year, for conclusion of negotiations on the investment pact. While Pakistan had given the bilateral trade talks a big push earlier this year by giving up the regressive positive list import regime with India in favour of a more liberal negative list regime, it still permits a very small number of items to be traded through the land route.
So, while the number of items allowed to be imported from India has increased from less than 2,000 to over 7,000, the number of products that Pakistan allows to be brought in through the land route still remains at 137.
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