It is part of India’s decision as trade normalization process to allow FDI from Pakistan. Currently, trade between the two countries is at some $2.5 billion per year. The Indo-Pak trade agreement is a big pie for companies on both sides. It is a win-win situation for small businesses too.

Companies on both sides are scouting opportunities. Pakistan based businesses have already started to contemplate on how they are going to make an entry in Indian market – whether as a franchise, a distribution model or something else. The mood is upbeat as there is the realization that there can be benefits on both sides.

Procedural requirements for FDI are underway. Talks are also being held for allowing banks to open branches in India and Pak. RBI and State Bank of Pakistan have expressed interest to start branches in India. Banking services will help in boosting small business loans to entrepreneurs.

Trade of goods has been liberalized so far. Now, Pakistani industries and banks are showing keen interest in setting up business in India. This is possible with a policy decision on cross-border FDI. India-Pakistan Business Council will also start soon and there will be a formal agreement on multiple entry business visas.

This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to info@biz2credit.in

Earlier the RBI had asked public sector banks to increase credit flow to the small business sector.