Chinese investors will no longer have to fret over investment proposals getting stuck for vague security reasons as New Delhi has put in place clearly defined criteria, the most significant being the appointment of Indians on critical positions and an unblemished corporate record.
“Specifically in case of Chinese investment, earlier our first reaction was to deny the security clearance but now we have defined parameters,” said a home ministry official, requesting anonymity. “Besides Pakistan, now we don’t have any country of concern that requires extra vetting. We’ll clear all proposals under the new parameters.”
The policy on foreign direct investment will cover three sectors: network systems, including operating software, defence and private security agencies. With critical infrastructure such as power and railways getting automated, ensuring network security is highly important, the official said.
Home ministry officials clarified the policy was not country-specific but Chinese investments would naturally see a huge impact.
Despite a global slowdown, India’s foreign direct investment inflows rose 26% in 2014 to an estimated $35 billion, according to the Global Investment Trade Monitor report released by the United Nations Conference on Trade and Development.
All proposals coming through the Foreign Investment Promotion Board will now have a national security clause under which if the investor company or its promoters are later found to have been involved in spying, money-laundering, terrorism or anti-national activities, its licence or contract will be terminated.
There was no such clearly defined clause in the earlier regime for security clearances.
“The companies will have to appoint Indians on critical positions such as chief network/technical officer and chief security officer. The department of telecom will check whether an operating system has embedded malware that may bring critical operations to a standstill,” the official said.
Companies will have to provide India-specific products in critical sectors. So, if a company supplies currency ink to India and Pakistan, it will be told not to provide the same product specifications to both countries.
Any foreign executive having served in Pakistan will have to undergo special security vetting before taking up an assignment in India.