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The Home Ministry may vet all foreign direct investment (FDI) proposals beyond 49 per cent across sectors for mandatory security clearance once the new FDI rules are approved.
The Industry Department, in its note on reviewing FDI cap and routes scheduled to be considered by the Cabinet on Thursday, has proposed that the Home Ministry’s proposal for vetting FDI applications that come to the Foreign Investment Promotion Board and the Cabinet Committee on Security may be accepted, a Government official told Business Line .
The proposal, if cleared, would give the Home Ministry a free hand in determining whether FDI proposals in all sectors, including the so-called sensitive ones such as telecom, space, defence and civil aviation, breach security parameters and should be rejected.
“There should be a provision in the FDI policy in addition to the existing provisions that for national security considerations, all FIPB proposals where FDI is beyond 49 per cent or proposals seeking CCS approval should mandatorily be referred to the Home Ministry for security clearance, irrespective of the sector,” the Home Affairs Ministry said in its response to the Cabinet note floated by the Industry Department (DIPP).
In an earlier communication to the DIPP, the Home Ministry had raised concerns about funding from countries like China, Pakistan, Bangladesh, Saudi Arabia and Indonesia through corporates putting the country’s security at risk.
The Ministry for Home Affairs has also proposed that the fresh FDI policy should contain a section on all FDI being subject to a national security exception clause for investments of concern and provisions to enforce it.
The DIPP, however, has called for separate consultations within the Government on the issue.
The Cabinet, in its meeting on Thursday, will consider the Industry Department proposal to raise FDI caps in the telecom, asset reconstruction and credit information sectors, while easing the approval routes for a host of other sectors.
> thomas.thomas@thehindu.co.in
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