LAHORE – India has notified its decision to allow Foreign Direct Investment from Pakistan, much to the pleasure of Indian industrialists.

On the other hand, the Indian industry has hailed implementation of the decision, stating Islamabad should reciprocate by granting New Delhi the Most Favoured Nation (MFN) status.

“It is a great decision. Now Pakistan should also implement the MFN status for India,” FICCI Secretary General Rajiv Kumar said.

The Indian government decision to allow FDI from Pakistan was notified by the Reserve Bank the other day. However, reports were issued to the media on Friday. “It has now been decided that 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, purchase shares and convertible debentures of an Indian company under FDI Scheme, subject to the terms and conditions specified,” the RBI notification said.

However, FDI in the strategic sectors like defence, space and atomic energy would remain prohibited, RBI said.

Assocham, Secretary General of DS Rawat also welcomed the decision. “It would lead to enhancement of bilateral economic engagement,” he said, adding the mutual trade has remained negligible, which should pick up. The bilateral trade is $2.7 billion.

Indian industry said Pakistani businessmen can explore sectors like cement, textiles and sports for investments in the country.

With India permitting investment from Pakistan, Indian industry expects Islamabad to grant the much delayed MFN status to New Delhi. This would mean that exports from India would be treated by Pakistan at part with its other trading partners.

However, Pakistan has liberalised its trade regime with India in March when it shifted from positive list rules to negative—meaning barring 1,209 items, it allows import of all other Indian goods.