NEW DELHI (AP) — India's government says it has lifted its ban on foreign investment by citizens and companies from neighbor and rival Pakistan.

The announcement from the commerce ministry came late Wednesday. The ministry said that all investment proposals from Pakistan must be cleared by the government and will exclude the defense, space and atomic energy sectors.

The gesture is the latest sign of a thaw in relations between the historical rivals.

Both countries were carved out of British India and achieved independence in 1947. They have fought three major wars since then, two of them over the disputed territory of Kashmir.

Relations have improved somewhat over the last year, especially with respect to trade. But they still view each other with suspicion.