A high level secretaries panel has asked the National Security Council to prepare guidelines for areas to be watched on FDI in certain sectors and from certain countries.
NEW DELHI: A high level secretaries panel has asked the National Security Council, which started a debate on potential threat to national security from Foreign Direct Investment in certain sectors and from certain countries, to prepare guidelines for areas to be watched.
A 19-member Committee of Secretaries, headed by Cabinet Secretary BK Chaturvedi, on January 31 asked the NSC Secretariat to prepare guidelines for specific areas, nations and firms in respect of which investment needs to be watched/monitored with greater care, government sources said.
The guidelines, once approved by the government, will be followed by Foreign Investment Promotion Board and RBI and a mechanism clarifying the procedures to be followed in cases/areas of doubt would be put in place.
NSC had in September identified 18 sectors including telecom, ports, airports, shipping, oil refining and gas pipelines as sensitive sectors and asked for greater regulation of FDI from China, including Hong Kong, Macau and
Taiwan, Pakistan, Bangladesh, Afghanistan and North Korea.
The existing system, the meeting observed, does not have a mechanism for examining comprehensively funds coming to sensitive locations, sensitive sectors and from countries of concern, neither at the time of approval nor during the period of operation of foreign entities.
Sources said while the Commerce Ministry wanted security concerns to be addressed at the screening level in the FIPB, Finance Ministry wanted existing provisions under FEMA and licensing requirements be modified to address the concerns.
Both opposed NSC's suggestion for an umbrella legislation 'National Security Exception Act' to cover existing foreign entites in India.
Sources said the Law Ministry was of the view that FEMA does not have provisions for criminal offences and penalties and needed large scale amendments to address the security concerns. It supported NSC's idea of an umbrella legislation.
However, Planning Commission and Shipping Ministry did not approve of the legislation but Ministry of Defence stated that a monitoring mechanism was necessary for screening FDI.
Countries like USA have put in place elaborate structures and enactments to disallow investments which were inimical to their interest.
NSC, sources said, has also been asked to formalise, in consultation with the ministries/departments concerned, the amendments proposed in FEMA and prepare a draft legislation to meet the long term security requirements vis-a-vis FDI.
Commerce Ministry at the COS meeting stated that Home Ministry could be involved at the screening level while Finance Ministry was of the view that the investor friendly image of the country will receive a set back if the word goes out that FDI is fraught with suspicion.
Intelligence Bureau (IB), however, stated that FEMA and the extent of licensing requirements were not adequately equipped to address the security concerns of the country.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}