FDI: panel to look into security concerns

This way, the government would adopt a middle-path while taking care of concerns of both intelligence agencies and also of the economic ministries as a law or guidelines at the initial stage would send the wrong signals to investor community.

Senior officials told The Indian Express there were two views that emerged in the meeting. One was from the intelligence agencies that listed out instances of potential threat and the other from the economic ministries that did not want to send out a wrong signal to investors.

Officials explained that at present, FDI screening is done by the Reserve Bank, FIPB, SEBI in case of institutional investors or and even at the Project Approval Board level. This is the initial stage and what the government does not intend to do is introduce any new guidelines here.

However, in case there is a potential threat from FDI after the initial screening or 8220;post establishment8221;, the new guidelines would outline how to deal with the situation.

Based on the information furnished in the latest background note circulated in the meeting chaired by the Cabinet Secretary, where some fresh instances of potential threat to national security were listed, officials acknowledged that while there are some cases that need attention, the government cannot send out a negative signal to investors that prevents FDI from coming to India, especially since India already ranks very low in the list of favoured destinations for FDI. In any case, the number of such cases is extremely small in the total list of FDI proposals coming to the country, officials explained.

It was in this regard that it was decided that the committee of secretaries under the Home Secretary would identify what could pose as a potential threat and thereby even suggest what the government can do in the event action has to be taken. Officials clarified that there would have to be credible evidence for government to initiate action.