India announced on Friday that it would allow foreign direct investment from Pakistan, thawing economic ties between the rival neighbors, according to Reuters.
Indian Trade Minister Anand Sharma made the announcement as both countries were due to open a trading post on the border. He said, "India has taken an in-principle decision, as a part of the process to deepen our economic engagement, to allow foreign direct investments from Pakistan in India," at a news conference with his Pakistani counterpart.
The tentative steps taken to build a relationship between the two neighbors, who have fought three wars against each other since they gained independence from Britain in 1947, were shattered when Pakistani militants attacked Mumbai, a major city in India, in 2008.
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Sharma also said talks were underway to allow banks to open branches in each other's territory, according to The Hindustan Times. His Pakistani counterpart Makhdoom Amin Fahim, said, "There has been progress in allowing banking services from both sides. In-principle we have agreed."
On Thursday, Pakistan's Commerce Secretary Zafar Mahmood indicated the likely liberalization of visa requirements between the two countries, according to The Hindu. Mahmood said there was a possibility that businessmen from India and Pakistan would be granted multiple-entry visas for more than one year, with access to many cities.
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Also on Thursday, the largest Pakistani commercial fair to date was hosted on Indian soil, in the capital of New Delhi, according to AFP. At the opening, Sharma said, "There is no other option but economic partnership between India and Pakistan." He added, "We have to recognize our true trade potential... and leave our children with a legacy that ensures prosperity, harmony and peace."
The AFP reported that the two countries have approved a most-favored-nation agreement to reduce taxes that would hinder trade. Official two-way trade between the countries amounts to $2.6 billion and weighs heavily in India's favor but estimates for unofficial trade amount to $10 million.
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