Setting aside the National Security Council’s move to identify “countries of concern” when it comes to vetting FDI proposals in critical infrastructure sectors, the Government is finding ways to address security issues without being country-specific.

Keen to send a positive message to Beijing when Chinese President Hu Jintao visits India on November 20, the thinking now is to identify “locations and installations” in key sectors where careful security screening will be done.

The NSC had raised the red flag on FDI in sectors such as ports and telecom through a series of background papers and notes. Last month, however, the NSC recommended that all FDI proposals from countries of concern — China, North Korea, Afghanistan, Pakistan, Bangladesh and Island countries that are tax havens — must be screened not only at the time of approval, but also “during the entire period of their operation”.

Some of the other points made by NSC include:

• “Sectoral regulators should seek opinion of intelligence and security agencies.”

• RBI should follow a “threshold criterion”, which means sounding an alert to security agencies in case FDI moves beyond a particular amount.

• In all tenders and agreements entered by Central and state governments or other government bodies, there should be a “national security exclusion clause” that can allow government intervention at any stage.

• In case of mergers and acquisitions, the screening should be done by RBI or SEBI.

The NSC’s premise to making these suggestions was that the existing system is “flawed”. The issue was on slow burn until China made public its discomfort and frustration at the endless screenings of Chinese companies.

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