FDI in Pakistan: Prospects for India



With the growing importance of FDI for developing countries, and against the background of investment trends, the attractiveness of Pakistan as a host destination, and the growing importance of India as a source destination for foreign investment in South Asia, there is great potential for Pakistan to attract FDI from India. In this context, this chapter identifies sectors in Pakistan that hold potential for investment.

While the removal of restrictions on FDI flows has opened up new opportunities, much remains to be done on both sides to facilitate and enhance investment flows. To realize the untapped investment potential, the two countries would have to undertake several measures in several areas. In this context, this chapter examines the regulatory regime governing investment flows between the two countries and the barriers to investment in Pakistan in order to bring out the need for policy coherence in investment with other areas of investment facilitation and business practices. Both governments need to address the regulatory and administrative challenges Pakistan faces in attracting investment from India. Innovative solutions are needed to increase investment flows.

This chapter proposes stagewise recommendations for better and sustained formulation of investment relations between India and Pakistan. Enhanced investment flows will not only benefit the two countries economically, but will also serve as a powerful tool to build peaceful bilateral relations.


Foreign Direct Investment Foreign Investment Foreign Direct Investment Inflow Outward Foreign Direct Investment Foreign Direct Investment Flow 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Aburime TU (2010) What drives IFDIs in the Nigerian banking industry? Cambridge Scholars Publishing, pp 112–123Google Scholar
  2. Ahmad M (2012, May 7) Vast scope for health sector cooperation. The News IntGoogle Scholar
  3. Asia Times (2010, January 12) Balochistan halts $3.5bn copper project. Available at http://www.atimes.com/atimes/South_Asia/LA12Df03.html
  4. Asian Development Bank (2009) Study on intraregional trade and investment in South Asia. Development Partnership Program for South Asia. Asian Development Bank, MandaluyongGoogle Scholar
  5. Athukorala P (2013) Intra-regional FDI and economic integration in South Asia: trends, patterns and prospects. Background paper no. RVC7. UNCTADGoogle Scholar
  6. Atlantic Council (2013, May 30) Atlantic Council announces startup Dosti Indo-Pak business plan competition. Press ReleaseGoogle Scholar
  7. BioCon (2007, January 18) Biocon grants exclusive marketing license for BiomapEGFR for Pakistan, Press Release 20. Available at http://www.biocon.com/biocon_inv_press_releases_18jan.asp
  8. Board of Investment, Pakistan (1995) National mineral policy. Available at http://www.pakboi.gov.pk/pdf/Sectoral%20Policies/Mineral_policy.pdf
  9. Board of Investment, Pakistan (2012) Special Economic Zones Act 2012. Available at http://boi.gov.pk/UploadedDocs/Downloads/GazetteNotificationSEZAct.pdf. Accessed 2 Apr 2014
  10. Board of Investment, Pakistan (2013) Investment guide. Available at http://boi.gov.pk/InvestmentGuide/InvestmentGuide.aspx
  11. Board of Investment, Pakistan (n.d.) Mineral sector. Available at http://www.pakboi.gov.pk/pdf/mineral%20sector.pdf. Accessed 1 Apr 2014
  12. Brada JC, Kutan AM, Yigit TM (2005) The effects of transition and political instability on foreign direct investment in ECE emerging markets. United Nations Economic Commission for Europe (UNECE), Spring SeminarGoogle Scholar
  13. Business Recorder (2014, January 22) Pakistan, India inch forward towards 500 megawatts power dealGoogle Scholar
  14. Chi, Jacquelyn (n.d.) Pakistan’s film industry: an analysis of the 1965 ban on Indian films. Culture and Communication Consulting. Available at http://southasiacommunication.wordpress.com/report-4-film-policy-pakistan/
  15. Desbordes R (2010) Global and diplomatic political risks and foreign direct investment. Economics and Politics 22(1):92–125CrossRefGoogle Scholar
  16. Desbordes R, Vicard V (2009) Foreign direct investment and bilateral investment treaties: an international political perspective. Journal of Comparative Economics 37(3):372–386CrossRefGoogle Scholar
  17. Drabek Z, Payne W (1999) The impact of transparency on foreign direct investment. World Trade Organization working paper no. ERAD-99-02Google Scholar
  18. Government of India (2013) Economic survey 2012–13. Ministry of FinanceGoogle Scholar
  19. Government of Pakistan (2013) Economic survey 2012–13. Ministry of FinanceGoogle Scholar
  20. Hamdani K (2011) Inward foreign direct investment in Pakistan and its policy context. Vale Columbia Center on Sustainable International Investment, Columbia University. Available at http://www.vcc.columbia.edu/files/vale/documents/Microsoft_Word_-_Pakistan_IFDI_Profilel_January_18_2011_final.pdf. Accessed 2 Apr 2014
  21. Husain I (2009) The role of politics in Pakistan’s economy. Journal of International Affairs 63(1):1–18CrossRefGoogle Scholar
  22. Husain I (2011). Prospects and challenges for increasing India-Pakistan trade. Atlantic Council, Washington, DC. Available at http://ishrathusain.iba.edu.pk/speeches/New/Atlantic_Council_Issue_brief_IndiaPakistanTrade.pdf. Accessed 1 Apr 2014
  23. Husain ST (2013) Trade in agriculture with India: view from Pakistan. India-Pakistan Trade Newsl, ICRIERGoogle Scholar
  24. IMF (2011) Balance of payments and international investment position compilation guide. International Monetary Fund. Available at https://www.imf.org/external/pubs/ft/bop/2011/pdf/Guide.pdf
  25. Jacobs S, Coolidge J (2006) Reducing administrative barriers to investment: lessons learned. World Bank, Washington, DCCrossRefGoogle Scholar
  26. Jaffri AA, Asghar N, Ali MM, Asjed R (2012) Foreign direct investment and current account balance of Pakistan. Pakistan Economic and Social Review 50(2):207–222Google Scholar
  27. Kaul S (2013) India-Pakistan energy mutual interdependence: win-win strategy. Centre of Policy Initiatives & Energy StudiesGoogle Scholar
  28. Khalid S, Ullah H, Shah M (2012) Declining trends of foreign direct investment in Pakistan (causes and measures). Journal of Basic and Scientific Applied Research 2(5):5148–5263Google Scholar
  29. Khan AH (1997) Foreign direct investment in Pakistan. Pakistan Development Review 36(4):959–985Google Scholar
  30. Lama M (2013) India-Pakistan energy cooperation: rethinking opportunities and newer approaches. India Pakistan Trade Newsl, 5–7. Available at http://www.indiapakistantrade.org/pdf/India-Pakistan-newsletter-13June.pdf. Accessed 1 Apr 2014
  31. Lambsdorff JG (1999) Corruption in empirical research – a review. In: Ninth international anti-corruption conference, 10–15, December, Durban, South Africa. Available at http://www1.worldbank.org/publicsector/anticorrupt/d2ws1_jglambsdorff.pdf. Accessed 1 Apr 2014
  32. Mid-Day (2012, April 11) Pakistani children could soon be ‘made in Mumbai’Google Scholar
  33. Mold A (2004) FDI and poverty reduction: a critical reappraisal of the arguments. Region et Developpement 20:61–83. Available at http://region-developpement.univ-tln.fr/en/pdf/R20/R20_Mold.pdf. Accessed 1 Apr 2014
  34. Naqvi J (2013, December 16) Punjab CMs set Pakistan, India agenda. DawnGoogle Scholar
  35. Raihan S, De P (2013) India-Pakistan economic cooperation: implications for regional integration in South Asia. Commonwealth Secretariat. Available at http://www.sanemnet.org/wp-content/uploads/2013/05/PS11953-5-India-Pakistan.pdf. Accessed 1 Apr 2014
  36. Shahbaz M, Rahman MM (2010) Foreign Capital Inflows-Growth Nexus and Role of Domestic Financial Sector: an ARDL Co-integration approach for Pakistan. Journal of Economic Research 15(3):207–231Google Scholar
  37. Shahbaz M, Ahmed N, Ali L (2008) Stock market development and economic growth: ARDL causality in Pakistan. Int Res J Finance Econ, ISSN 1450–2887 Issue 14Google Scholar
  38. Taneja N, Bimal S (2012) FDI – a major milestone in Indo-Pak ties. Hindu Bus LineGoogle Scholar
  39. Taneja N, Mehra M, Mukherjee P, Bimal S, Dayal I (2013) Normalizing India-Pakistan trade. ICRIER working paper 267. ICRIER, New DelhiGoogle Scholar
  40. The Express Tribune (2012, July 25) Should Indian films be banned in Pakistan? Retrieved from http://tribune.com.pk/story/412954/should-indian-films-be-banned-in-pakistan/
  41. The News International (2013, September 27) Pakistan, India launch joint venture. Available at http://www.thenews.com.pk/Todays-News-3-204518-Pakistan-India-launch-joint-venture. Accessed 1 Apr 2014
  42. Times of India (2011, February 11) India, Pakistan doctors perform joint liver transplant in LahoreGoogle Scholar
  43. Trade Development Authority of Pakistan (2012) Normalization of trade with India: opportunities and challenges for Pakistan. Available at http://www.tdap.gov.pk/word/Report_040712%20rev.pdf. Accessed 2 Apr 2014
  44. UNCTAD (2005) Economic development in Africa: rethinking the role of foreign direct investment. United Nations Conference on Trade and Development, GenevaGoogle Scholar
  45. UNCTAD (2010) World investment report. United Nations, New YorkGoogle Scholar
  46. UNCTAD (2013) World investment report 2013. Global value chains: investment and trade for development. United Nations, New York/Geneva. Available at http://unctad.org/en/publicationslibrary/wir2013_en.pdf. Accessed 2 Apr 2014
  47. Wall Street Journal (2011, September 27) Big Pakistan mine draws fresh government objectionsGoogle Scholar
  48. World Bank (2009) World investment and political risk. Multilateral Investment Guarantee Agency, World Bank Group. Available at http://www.miga.org/news/index.cfm?aid = 3411. Accessed 2 Apr 2014
  49. World Bank (2011) More and better jobs in South Asia. The World Bank, Washington, DCGoogle Scholar
  50. World Bank (2012) Logistics Performance Index. Available at Lpi.woldbank.orgGoogle Scholar
  51. World Bank (2013) Doing business economy rankings. Available at http://www.doingbusiness.org/rankings
  52. Zakaria M, Naqvi HA, Fida BA (2014) Openness and FDI in Pakistan: what does the data tell us? Middle-East Journal of Scientific Research 19(12):1587–1597Google Scholar

Copyright information

© Indian Council for Research on International Economic Relations (ICRIER) 2015

Authors and Affiliations

  1. 1.Indian Council for Research on International Economic RelationsNew DelhiIndia

Personalised recommendations