The Hindu Business Line : Stringent monitoring of foreign investments mooted

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Stringent monitoring of foreign investments mooted

Our Bureau

New Delhi , July 14

In a bid to address the security concerns arising out of foreign investments coming into the country, the National Security Council Secretariat (NSCN) has suggested to put in place mechanism to bar acquisitions, mergers or takeovers of Indian companies if there is evidence that a foreign controlling interest might threaten national security.

NSCN said that there was a need to guard against the application of foreign laws by multinational companies in India that could adversely affect the country's domestic and foreign trade.

Suggestions

The council has suggested setting up a vigilance team based on the lines of the Committee on Foreign Investment in the United States (CFIUS) to review foreign investments. The NSCN has also mooted including communication network management equipment within the purview of industrial licences governed by the Industries Development and Regulation Act, 1951. This could have an impact on the plans of equipment manufacturers such as Nokia, Ericsson and Motorola who have announced plans to set up telecom equipment production unit in the country.

Security concerns

The NSCN suggestions come in the wake of concerns raised by the National Security Advisor about the security implications of Egypt's mobile telecom company Orascom's decision to take 19.3 per cent stake in the Hong-Kong based Hutchison Telecommunications. This deal lead to Orascom holding an indirect stake of about 10 per cent in the Indian cellular company Hutchison Essar.

The council has raised concerns about foreign companies acquiring Indian entities that have traditionally been the supply lines for Indian strategic industries. It has pointed to the decision by the Defence Research and Development Organisation (DRDO) to re-route its supply chain after the acquisition of National Organic Chemical Industries Ltd by DuPont.

NSCN has called for a discussion on the issues involving the DRDO, Ministry of External Affairs, Department of Space, Ministry of Defence, Department of Commerce and Ministry of Law and the intelligence agencies.

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