Foreign investors in companies that provide armoured car services or train private security guards will have to comply with the 49 per cent FDI cap, the government has clarified, ending ambiguity over whether such companies could be considered logistic providers.
A stringent framework for private security agencies in line with the home ministry’s definition of such entities has been put in place in the annual FDI compendium published by the department of industrial policy and promotion. The consolidated FDI policy circular has defined the terms private security agencies, private security and armoured car services, as per the PSAR Act of 2005. Companies ferrying cash for banks were caught in a policy tangle with the home ministry insisting that 100 percent FDI could not be allowed to them if they provide private security guards or armoured cars.
In such cases, the companies cannot classify themselves in the logistics provider category where 100 per cent FDI is allowed. While the circular does not categorically state whether cash logistics firms come under the PSAR Act, reports say that such decision will be taken by the home ministry when the need arises.
The home ministry stance has been reiterated in the FDI policy since deals it with the sensitive issue of national security.
