KARACHI: A new policy aimed at facilitating startups and fintech companies will make it possible for Pakistanis to make direct investments in arch-rival India, a market that has long been inaccessible to them due to hostile relations between the two countries.
Relations between the two South Asian neighbors have been tense since the partition of British-ruled India into Muslim Pakistan and majority Hindu India in 1947. Two of the three wars they have fought since have been over the disputed region of Kashmir, which both nations claim in full but rule in part.
Ties have been particularly tense since August 2019 when India revoked the autonomy of its portion of Kashmir, putting in place curfews and communication blockades. In recent months the diplomatic relationship has worsened further as Delhi and Islamabad each ejected half of its neighbor’s diplomats.
India granted most favored nation (MFN) status to Pakistan in 1996, allowing it non-discriminatory access to its market. The move was never reciprocated. New Delhi withdrew Pakistan’s MFN status in 2019, after an attack in Indian-controlled Kashmir that nearly sparked a full-blown war.
“The new policy for equity investment abroad will attract foreign direct investment through the establishment of holding companies by Pakistani fintechs and startups,” the central bank said in a statement on Sunday, saying the policy would facilitate exporters to establish subsidiaries or branch offices outside Pakistan and allow Pakistanis to acquire sweat equity, a non-monetary benefit.
While the policy now opens a window for investment in India, companies might still have to meet India-specific requirements.
“In the case of India it will have to look at what other rules and regulations dictate,” central bank spokesperson Abid Qamar told Arab News on Friday. “It is not that you go and make investment ... it may be you need permission.”
“If there are any other India-specific rules and regulations, they will have to be met,” he said.
