Foreign Office spokesman Moazzam Khan welcomed the Indian government's decision to allow Pakistani investments in all areas except defence, space and atomic energy.
The move will benefit Pakistani investors and industrialists, he said.
"We hope this decision will be fruitful for the people of both countries," Khan told the media.
Majyd Aziz, a leading Karachi-based businessman with interests in minerals and shipping, described the Indian government's decision as a "progressive step and a good initiative but not a landmark development".
"Pakistani industrialists are already able to invest in the Indian market through companies based in places like Dubai and Singapore. It will take some time for direct investments to happen," Aziz told PTI on phone from Karachi.
"It would be a landmark development if the Reserve Bank of India removes Pakistan-specific clauses and allows Indian businessmen to invest in Pakistan," he said.
However, he acknowledged that steps like India's decision to allow Pakistani investments would eventually lead to the normalisation of relations in all spheres.
A statement issued by India's Commerce Ministry yesterday said the government had reviewed its policy and "decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India".
The statement said investments would not be allowed in defence, space and atomic energy, and all propositions would have to be notified to Indian authorities.
Edited By Cen Fox Post Team
