The Indian government has announced its decision to allow investment from Pakistan, a move that will give a big boost to the economic relations between the two neighbors.

Official of India's union commerce ministry has said that a citizen or a company of Pakistan is now permitted to invest in the country. However, the investment form Pakistan will not be permitted in the sectors of defence, space or atomic energy.

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.

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.

The Liberalization 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.