India has removed its apprehension against Bangladesh by allowing it to make investments in the country after the amendment of the Foreign Exchange Management Act (FEMA).
Earlier, however, companies and individuals from Bangladesh and Pakistan were restricted from making investments in India, according to the (FEMA) provisions. Sri Lanka was dropped from the negative list, long back in 2004. Nonetheless, the limitations will continue to have its effect on Pakistan.
With Bangladesh receiving a green signal from (FEMA), bilateral trade with India is likely to get strengthened. The India-Bangladesh bilateral investment promotion agreement (BIPA) met a set back due to the ban imposed on foreign direct investment by India.
However, Indian investment in Bangladesh did not face any restrictions and the garment manufacturing companies of India had made undaunted investments in Bangladesh. This of course had created concerns for Bangladesh which pointed out the issue not only at bilateral forums but also at SAARC meetings.
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