From Pakistans move to grant MFN status to its nuclear rival and neighbour, back in October last year, and promises of striking out items off the negative trade list, to the agreement on the issuing of banking licenses and India allowing Pakistani investment; trade liberalisation efforts by the two countries have been the one good news for the current year.
Though the adversaries never cease with regulatory and intuitive check posts obstructing the pace quite often, the benefits of this historic trade push are countless. The recent announcement of India permitting FDI from Pakistan could not have been better for the hoary deadlock in trade and investment between the two countries.
And now that a local citizen or an entity incorporated in Pakistan can purchase shares and convertible debentures of an Indian company, the tardy revamp of trade relations between the two countries can move one step ahead. Not only this, the consumer good giants like Godrej and TATA of India have spilled out interests in the growing population of Pakistan.
From postponement of liberalised visa regime to unconvincing bilateral talks, the entire peacemaking and trade liberalising process so far, has hit a snag many times and may continue its battle with the inhibiting factors. But what is of key importance here is the opportunity that lies for Pakistan to increase its foreign direct investment.
A strategic step by India, where it seems to take full advantage from the opportunity is its endeavour to increase its FDI at a time when the same have slumped by 78 percent YoY. While it might not bring any mammoth changes for India from Pakistan alone, a similar policy by Pakistan could bring good fortunes to the land.
The enabling business environment on both sides of Wagha would promote cross-border JV and M&A activities, and bag Greenfield investment in key sectors - the two key forms of FDIs.
What could take this yet another step further is policy drafting by Pakistan where it also allows direct investment from India in sectors like FMCG, oil and gas. FDI would definitely increase economic integration between the two nuclear powers. But the journey is definitely not smooth-sailing; many historical and political barriers might be hard to overcome.