India's union Commerce and Industry Minister Anand Sharma has indicated that India will soon start allowing Foreign Direct Investment from neighboring Pakistan.

The move is likely to boost economic exchanges between the two countries as Pakistani businessmen will be able to set up businesses in the growing Indian economy. The two countries currently only permit trade of goods.

"India has taken in-principle decision as part of trade normalization process to allow foreign direct investment from Pakistan," said Sharma. He was speaking in the aftermaths of a meeting with his Pakistani counterpart Makhdoom Amin Fahim.

Many Pakistani industries and banks are looking to set up businesses in the country and the move by the Indian government to allow FDI will soon allow the investments to flow into the country. Sharma also announced that the two countries will set up India-Pakistan Business Council that will be chaired by both the countries.

Sharman also said that the government has already taken in-principle decision to allow foreign direct investments from Pakistan in India. The Liberalisation of heavily restricted trade and investment flows is a part of the improvements in ties between the two neighbors, who often have sore relations due to various unresolved groups.