The fate of the proposed umbrella legislation to cover all aspects of FDI inflow into the country hangs in the balance, following stiff opposition from several big business and industrial honchos and influential sections in the government. It may take a couple of months of inter-ministerial discussions and secretary-level meetings to fructify the bill leading to the enactment of the proposed law.
A senior government official told HT on condition of anonymity that the recommendations of the National Security Council Secretariat (NSCS) on potential threats to India's national security from FDI were sweeping. Describing the NSCS report as “alarmist”, the official said that in the prevailing globalised world, there had to be a balance between FDI inflow and national security. “As against creating unnecessary roadblocks for FDI inflow, we have to hone our screening system, controlled by the security agencies, to meet the new challenges of global economy,” he said.
The official questioned the advisability of banning FDI from a host of countries except in a few selective cases. The NSCS document has identified several sectors such as seaports, airports, aviation, telecommunications, internet services and shipping as sensitive and therefore, requiring greater security screening and regulations. The report has short-listed at least nine countries — including China, Pakistan and Bangladesh — as “countries of concern” that need to be subjected to a close security screening.
According to the NSCS document, the Intelligence Bureau is of the opinion that FDI from tax havens like Mauritius must be subject to full disclosures of actual and beneficial ownership. The R&AW has suggested that countries with whom we have gone to war in the past and have continuing problems, like unsettled borders, need to be placed in the sensitive list. This will, obviously, include China and Pakistan. But the R&AW has said inclusion in the sensitive list must not come into force merely because a company is registered in any of these countries.
While the Ministry of Home Affairs has called for the inclusion of all entities controlled by countries inimical to India — especially in sensitive and strategic sectors — in the sensitive list, the Department of Telecommunications (DoT) has suggested that FDI and security should be dealt with separately. “In the telecom sector, boundaries are demolished. France telecom is managed from India,” the DoT has indicated.