Acknowledging strong opposition from different Ministries, including External Affairs and Finance, the National Security Council Secretariat (NSCS) has dropped its proposal to list “countries of concern” while screening foreign direct investment (FDI) in the country.

The NSCS draft guidelines — a copy of which is with The Indian Express — instead call for three separate “trigger lists” to identify foreign investors for special scrutiny “in a manner that would not send a negative signal to potential investors” but “help the concerned ministries, security and intelligence agencies in quickly identifying the entities which require special scrutiny”.

According to the NSCS, the first trigger list should be based on “investors of concern” such as those involved in money laundering and links with terrorists, the second on “sensitive sectors” and the third on “ sensitive locations” and areas within 50 km of the international border. The trigger lists must be reviewed annually.

“If an entity does not figure in any of the three lists, the FDI would continue unimpeded,” the guidelines suggest.

The NSCS has also recommended that all FDI proposals should get clearance within 30 days, failing which clearance will be understood to have been provided.

The Ministry of External Affairs had opposed the proposal to list “countries of concern” , saying “there are serious foreign policy implication of singling out China and other specific countries for security screening... Any targeting of Chinese companies apart from its political fallout is likely to affect our economic interests”.

The MEA also questioned another NSCS proposal: “The utility or desirability of an umbrella legislation like the National Security Exception Act is debatable.”

... contd.