Allowing FDI from Pakistan: What India Needs to Consider

Posted on April 19, 2012 in Business and Economy

By Awanish Shahi:

The news of India deciding, in principle to allow FDI from Pakistan, to me, is like a bolt from the blue. This can be seen as gesture of goodwill and one among many initiatives to deepen the friendship between two nations which share almost a common history. But to me it’s a solemn issue, and I feel skeptic about this friendly move to strengthen sore relations between the two nations.

While India still mourns 26/11 Mumbai carnage and many such past inhuman incidents still haunt the minds of almost every Indian, this handshake to promote trade seems preposterous. The only country in negative list under the Foreign Exchange Management Act, or FEMA is Pakistan which prohibits it from investing in India. Sri Lanka and Bangladesh were removed from the negative list in the year 2006 and 2007 respectively.

In case we allow this move on FDI to shape in, I think three points need to be kept in mind, leaving aside the good trade. The first point to begin with will be the security of our country. We have to minutely observe that there should not be any compromises on national security. Second point, would be a rigorous cross-check of every Pakistani company interested in trade before giving clearance to it. A complete back ground check like who are the directors of the company, have they ever been involved in any anti-India activities, who funds this company etc, as these companies can in turn be funding agencies for various India-dwelling terrorist outfits. RBI and the State Bank of Pakistan are thinking of opening bank branches in each others’ countries. This can be a source of false currency circulation in the country. The third and the most crucial point will be punishments and sever prosecutions on indulging in any anti-India activity.

Though, viewing these developments from the aspect of relations between the two countries, as an ideal common Indian, I, too, give this crucial step my nod, and hope our Ministry of Commerce and Industry with Ministry of Home affairs will formulate safer policy for FDI from Pakistan.