India Inc’s ambitious plans to cross the LoC have hit a political stonewall. The much-publicised thaw in Indo-Pak political relations notwithstanding, leading business houses – led by Rahul Bajaj’s Bajaj Auto, Lalit Suri’s Bharat Hotels and the Tata group – have not been given permission to invest in ventures in Pakistan.

And playing spoilsport again is Kashmir. As Suri – who had proposed to invest in the hotel industry, stock-broking and an air-conditioning plant in Pakistan – puts it: “The policy in Pakistan is that they will allow investments from India only after the core issue of Kashmir is sorted out. We have, therefore, put our proposed ventures on hold for the present.”

Industry insiders said despite the economic interests of Pakistan businessmen and policy makers, the political compulsions are keeping the Pakistan authorities from allowing Foreign Direct Investment (FDI) from India to flow across the border. “While Pakistan is allowing investments from across the world, the FDI proposals of Indian ventures have not been given the go ahead due to political reasons... They want the political issues to be sorted out first before investments are allowed from India,” an industry insider said.

Because of this same political problem, Reliance Industries had pulled out from a PTA project in Pakistan, as reported by Times of India earlier. Suri had recently paid a flying visit to Islamabad, Rawalpindi and Lahore with the twin objectives of making an emotional journey to his birthplace and exploring investment scopes. “While we have directly not been refused entry, indications have been given to the Indian industry that the political issues between the two neighbours need to be sorted out first.”

While officials at Bajaj Auto chose to remain mum, sources said the two-wheeler major has also slowed down with its plans. Bajaj Auto had even initiated talks with Pakistan’s Saigol group to sell its scooters, motorcycles and autorickshaws there. Even Tata Steel had proposed to look at Pakistan for doing business. The proposed ventures have also been hit by the lack of an investment protection treaty. “A variety of services, including a guard against political change and a treaty to allow repatriation of funds from Pakistan, need to be put in place,” an official said.

Trade bodies are now mounting special missions to Pakistan to drive this change in mindset. “We are holding made-in-India exhibitions in Pakistan,” said Ficci secretary general Amit Mitra.

<B>A.S. ANAND

Times of India</B>