Ringing in the old

The most frightening thing about the security bureaucracy8217;s proposal to regulate the telecom equipment sector 8212; the infamous Industrial Development and Regulation Act is to be dusted down 8212; is not nefarious foreign intentions. It is the ease with which the Indian state can revert to a licence-permit raj mindset. This is not to say that India hasn8217;t suffered in the past on account of 8216;dual use8217; rules that suddenly restrict access to technology. But those times were conditioned by India being out of step with the nuclear club. Now, with the Indo-US nuclear deal looking as good as done and given the general reassessment of India8217;s standing in the global community, such fears appear somewhat paranoid.

India8217;s FDI regime is complicated enough as it is. A decade and half after India said it was abjuring autarchy, it still doesn8217;t have an FDI regime that allows automatic approval for all sectors bar a small, publicly known negative list. Despite this and thanks to the sheer economic logic of some of India8217;s economic sectors, foreign investors have been hyper keen to participate. Telecom equipment is one such sector 8212; the demand for a telecom network is growing with the demand for wider and deeper connectivity. Nokia, Alcatel and Ericsson are among the majors that want to increase their participation in the Indian market. They would be somewhat surprised if they were told the Finnish or the French or the Swedish government could be planning to deny India vital technology. Their experience suggests their home country governments are all for their making money from one of the world8217;s most talked-about economies.

There remains the case of Chinese companies like Huawei and ZTE. True, it is romantic nonsense to think either that the Chinese state is the same as European ones or that Chinese companies do not often function as de facto agents of aggressive state policy. The trick here is to let the companies come and keep a very close eye on them. That is what China does.