As the government woos Chinese firms to invest in manufacturing units and business entities here as part of its “Make in India” policy, the Union Home Ministry is working on balancing easier and faster security clearances for Chinese FDI with tighter post-investment monitoring in “sensitive” sectors.
Suggestions being considered ahead of Prime Minister Narendra Modi’s visit to China include capping the time-limit for all security clearances at 60 days and mandating full disclosure of actual ownership pattern of the investor, while simultaneously examining the option of an enabling legislation for the government to act in cases where national security concerns arise post-investment.
“… Government/FIPB approval is (now) required for transfer of ownership or control of Indian companies in sectors which have caps for foreign investment … However, if a foreign investment is found to be working against national security interests, presently we do not have any legal framework to address the same,” said a background note prepared by the National Security Council Secretariat (NSCS) on review of security clearance norms for Chinese FDI. The review will involve all stakeholders including the Home Ministry, Department of Industrial Policy and Promotion (DIPP), intelligence agencies and other ministries like telecom, petroleum, etc.
The note prepared by the National Security Council Secretariat (NSCS) called on the DIPP to work out the legislative framework with the law ministry, after recalling that a committee of secretaries had directed, in March 2010, that a legislation should be considered to enable the government to act in cases where national security issues arise after investment.