New Delhi, Feb. 10: The commerce ministry has proposed foreign direct investment (FDI) from Pakistan on a case-by-case basis.

Jairam Ramesh, the minister of state for commerce, has written a letter to external affairs minister Pranab Mukherjee for support to allow FDI from Islamabad.

“If FDI from Pakistan is allowed on a case-by-case basis through the normal FIPB (Foreign Investment Promotion Board) route, security concerns can be addressed,” Ramesh said in the letter.

Ramesh wrote that the case for pushing Indian FDI into Pakistan would be strengthened if India removed the ban on FDI from Pakistan.

“It is possible that over time, Indian investment in Pakistan will have an impact on bilateral trade flows to Pakistan’s benefit, as it has in the case of Sri Lanka,” the letter stated.

Such a move will substantially address Pakistan’s fears of a huge trade deficit with India. The letter stated that similar concerns appeared to exist among Indian policy-makers vis-à-vis the country’s trade relations with China.

Pakistan and Bangladesh were the only countries that figured on the FDI negative list under India’s Foreign Exchange Management Act.

With the Indian government allowing investments from Bangladesh, the only name on the negative list now is Pakistan.

Ramesh told The Telegraph that for cross-border trade, India had sent a list of 14 categories to the Pakistan government, which had approved nine.

Within these nine categories are items such as carpet, handicraft, furniture, silk, dry fruit, flower and spice, saffron, medicinal herb and coriander.

Pakistan is yet to grant India the most favoured nation status.

Despite this, the export of Indian goods to Pakistan in the last financial year has touched $1.4 billion.

The minister said there might be reservations on Pakistan’s part about India’s economic and commercial expertise, just as New Delhi had its concerns about China.

Ramesh said India would back the Tatas’ proposed $3-billion investment plan for Bangladesh in power, steel and fertiliser sectors.

“This will be almost equal to the total FDI investment that Dhaka has received in the last 40 years,” he said.

Analysts said South Asian nations could not be isolated from the globalisation process and economic integration among them was necessary.

They said restricting FDI investments from Pakistan on security considerations was not proper.

Allowing such investments will not only address the security concerns but also instil confidence in the two neighbours.

Economic integration among the south Asian countries would help in protecting the countries from adverse global economic trends such as recessions.

India is also reviewing the 744 trade items that are on its negative list vis-à-vis imports from its partners in the South Asian Association for Regional Cooperation.

Officials said there was a possibility that the list could be pruned.

Lanka trade

Implementation of the free trade agreement between India and Sri Lanka is likely to be reviewed when Ramesh visits the neighbouring country tomorrow, reports PTI.