The home ministry has raised serious concern over hiking FDI cap in defence, space, telecom and a few other areas, contending that flow of funds from countries like China in these sectors may compromise the country's security.
This was conveyed by the home ministry to the department of industrial policy and promotion (DIPP) and it is all set to dash off another letter conveying its strong opposition to any such move which may jeopardise internal security.
The home ministry said FDI beyond certain limit from countries like China, Pakistan, Bangladesh, Saudi Arabia and Indonesia in defence, space, telecom, information and broadcasting and civil aviation may allow people from these countries to dictate terms which could be contrary to India's interests.
"It is a serious issue. We have already conveyed our view to the DIPP and will soon write another letter explaining the reasons behind our opposition in hiking the FDI cap in these key sectors," a home ministry official said.
FDI in these sectors needs mandatory security clearance from the home ministry.
The recommendation of a committee to raise FDI limit to 49% in almost all sectors through automatic route was also opposed by the home ministry saying safeguards must be put while allowing hike in FDI in key sectors.
The committee, headed by economic affairs secretary Arvind Mayaram, had recommended that FDI limit be raised to 49% in almost all sectors through automatic route.
The committee suggested that FDI in defence be raised to 49% under the government approval route, from the current 26%.
Last week, the DIPP held first round of consultations on the proposal to raise FDI ceilings in different segments.
All the concerned departments and ministries are expected to send their views on hiking the FDI ceiling to the DIPP within a day or two and subsequently it would submit a detailed report to commerce and industry minister Anand Sharma by July 7.