Suggests setting up core group to examine FDI proposals on a case-to-case basis

After telecom and ports, the Home Ministry has cautioned against allowing Chinese investments in Railway projects in sensitive border areas that may pose a security risk to the country.

It has suggested that a core group be set up with technical and security expertise to evaluate foreign direct investment proposals on a case-to-case basis to ensure that such investments do not compromise the country’s security.

The suggestions are part of the Home Ministry’s response to a Cabinet note circulated by the Department of Industrial Policy & Promotion on liberalising the FDI regime in Railways. The Government is seeking to allow FDI in high speed train systems, suburban corridors and dedicated freight line projects implemented in public-private-partnership mode.

Important suggestions

These are important suggestions in the context of Railways’ proposed factory projects for which Chinese firms are competing with American and European firms. Earlier, the Railway Board Chairman had said that all bidders will have to be cleared by the Ministry of External Affairs to do these projects. But, both these projects are proposed in Bihar, which does not qualify as a “sensitive border” area.

According to the proposal, the core group, to be set up by the Railways Ministry, will also have other Ministries and Departments including Home Affairs. It would examine proposals on a case-to-case basis to ensure that security concerns are not breached, the note said. The Home Ministry’s suggestions have been incorporated by the DIPP in the final Cabinet note which is likely to be taken up by the Union Cabinet soon for approval, a Government official told Business Line.

Chinese workers and technicians in restricted or sensitive border areas may not be desirable from security angle and should be allowed only with requisite security permits, the Home Ministry has proposed. While recognising the need to allow foreign investments for expansion and modernisation of the railway network, the Home Ministry said that all issues related to security, safety and quality control should vest with the Indian Railways irrespective of the operator/ investor of the new project or line.

(This article was published on January 30, 2014)
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