The Indian government has lifted the curbs it had placed on Pakistanis investing in India, causing Pakistan Foreign Office to welcome the step even though business circles warned that this would increase the flight of capital from Pakistan.
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Reversing a ban on Wednesday, India allowed foreign investment from
Pakistan to "build goodwill" amid a renewed push for peace, is all but a
tricky business because New Delhi expects Pakistani bourgeoisies will
show no hesitation in positively responding to the offer. Defence, space
and atomic energy will, however, remain out of Pakistani investors
domain in addition to a Reserve Bank of India's Pakistan-specific
regulation that the Indian companies could not invest in Pakistan. This
makes the Indian offer clearly one-sided with no additional benefits to
Pakistan and Pakistanis. No doubt the atmosphere for industry and
business is not conducive owing to energy crisis, political uncertainty
and other factors in the country and Pakistani investors have moved to
Bangladesh, Sri Lanka and Middle Eastern and African countries, extra
caution should be demonstrated while investing in India because New
Delhi avidly aims at running away with sensitive issues, such as Kashmir
and building of dams on Pakistani rivers. The decision to accept
investment from Pakistan was taken in April this year when the trade
ministers of the two countries met in New Delhi and also discussed
easing visa restrictions on business travel and the possibility of
allowing banks from both countries to open cross-border branches. New
Delhi has said that the improved relations between the rivals stemmed
from Pakistan's decision to grant India 'most favoured nation' status by
the end of the year. In further progress, the neighbours opened in
April a second trading gate along their heavily militarised border,
boosting the number of trucks able to cross daily to 600 from 150. India
also said the move was essential to engage Pakistan for the South Asian
Free Trade Agreement. The Indian offer comes at a time when Pakistan is
witnessing a plunge in foreign investment as, according to a State Bank
of Pakistan report, foreign investment in the country fell 65.6 per
cent to $680.4 million in the year ended on June 30 from $1.98 billion
the previous year. But the offer may be seen in the background that New
Delhi, like the whole world, failed to respond to a Pakistani incentive
for local and foreign investors to invest on the basis of cent per cent
ownership of businesses and repatriate capital and profit.
The offer is mainly aimed at India harvesting the crop of profit from
Pakistani investors. Allowing individuals and corporates to move capital
out of Pakistan was scarcely a step to applaud when the country itself
need big foreign inflows to boost its economy and bolster external
balances. If India is really sincere in Pakistan's economic face
lifting, it should remove the ban on Indians investing in Pakistan and
make the offer mutually beneficial because attracting Indian investment
into Pakistan, rather than siphoning off already depleting investment
from Pakistan to India, is what we need right now.
The Pakistan government must ensure that India eliminates the non-tariff
barriers it has erected, and which are the secret of its surplus with
Pakistan as well as other countries, and while it must be ready for
equitable trade, it must not do the wrong thing for the wrong reasons.
If India was to see that Pakistan was a sovereign country, willing to
make trade agreements only with those who paid attention to its national
interests, it would be more careful.
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