"During discussions, both sides agreed upon the desirability of promoting bilateral investments and removing impediments for such investments and to start the transition process for normalisation of trading of goods and services, including investment," Sharma told law-makers.
In his written reply to a question in Rajya Sabha on whether India has decided in-principle to allow FDI from Pakistan, Sharma said "Yes".
"The move is expected to enhance the commercial engagement and bilateral trade between India and Pakistan," he said.
Sharma said that his ministry has requested the Ministry of Finance to amend the Foreign Exchange Management Act (FEMA) to allow FDI from Pakistan.
"The Ministry of Finance has been requested to take steps to appropriately amend the relevant FEMA regulations," he said.
Pakistan is the only country from where investment is not permitted in India.
The proposal envisages allowing investments from Pakistan through the government approval route. It will require scrutiny by the Foreign Investment Promotion Board, wherein relevant considerations, including security issues, will be taken into account.