FDI from countries like Pakistan and Bangladesh should be permitted on case-by-case basis, Ramesh said.

"Our mindset towards trading partners needs a change. We must see what we can buy even while we explore possibilities of what we can sell," the minister was quoted by leading financial daily "The Economic Times" as saying.

The change in India's mindset, he said, was required to realise the full potential of regional trade and economic integration with the neighbouring countries.

While India's exports to Bangladesh stood at two billion dollars, the import at merely 200 million dollars. "While Dhaka has permitted FDI from India, Bangladesh is under negative FDI list here," Ramesh pointed out adding this needed to be reconsidered.

He said smaller economies do apprehend the take-over by major ones and the only way is to permit FDI. "We have seen in Sri Lanka where our imports surged a lot after Indian companies made investments there," Ramesh said.

According to the minister, there is a huge potential of trade across the Line of Control dividing Kashmir but there are apprehensions that need to be addressed first.

"For our trade with Pakistan, we need to think out of the box," Ramesh said it was "strange" that India is the world's largest producer of tea with 950 million kg a year while Pakistan, the world's third largest team importer, buys only 10-12 million kg of tea from India out of its total requirement of 170 million kg a year.

Meanwhile, the newspaper, quoting unidentified official sources, reported that Indian policy makers are mulling use of a proposed World Trade Organisation (WTO) agreement to make it mandatory for Bangladesh and Pakistan to allow passage of gas and oil pipelines through their territories to India.

Bangladesh's insistence on trade concessions in return for a pipeline through its territory to transport gas from Myanmar to India had stalled talks between Dhaka and New Delhi.

The mandate of WTO's negotiating group on trade facilitation, which was set up in October 2004, includes suggesting measures to increase "the freedom of transit" and the idea is to extend trade felicitation beyond customs matters to include fixed installations such as pipelines which themselves are capable of moving goods, "The Economic Times" reported.

However, an agreement on trade felicitation is far from finalised and India is yet to take a view on whether it should support inclusion of freedom of transit in the WTO agreement, Indian Commerce Secretary G K Pillai said.

Besides, WTO members are yet to take a decision on whether any future agreement on trade felicitation should be legally binding on countries.