a person resident in Pakistan or an entity incorporated in that country was not
allowed to purchase shares or convertible debentures in an Indian company. This
was by virtue of Regulation 5 of the Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident Outside India) Regulations, 2000.
of a circular
dated August 22, 2012, the Reserve Bank fo India (RBI) has partially removed
this prohibition. Now, a person who is a citizen of Pakistan or an entity
incorporated there may invest in an Indian company under the approval route,
i.e. with the prior approval of the Foreign Investment Promotion Board (FIPB).
However, investment is not permitted in specific “sectors/activities pertaining
to defence, space and atomic energy and second/activities prohibited for
The blanket ban has given way to a more
restricted avenue for investments.