There is an unnecessary debate in this country about the need to vet foreign direct investment proposals from certain countries of concern by our intelligence agencies. Some Left parties are concerned that these recommendations are directed against China and object to India’s adopting double standards in respect of FDI from western countries and from China. Foreign Minister Pranab Mukherjee has issued a statement asserting that the government does not adopt different standards vis-a-vis different countries in respect of their FDI bids on infrastructural projects.

There is no doubt that those who recommend scrutiny of bids on infrastructural projects by certain countries allegedly of concern according to their perception are motivated by a traditional approach to international relations as are some of our political parties. If dominant opinion is that from the Indian point of view there are good nations and bad nations, and that consequently our policies towards them should be calibrated on that basis, then it is natural for intelligence agencies to adopt the perspective. This would then extend to scrutiny of FDI proposals too.

For observers who have a pragmatic view of globalisation and today’s international balance of power politics, both these views are untenable. In the present balance of power system all major powers compete with each other strategically and economically to maximise their respective national interests. Since this is a globalised market economy, decisions on foreign direct investment in another country will be taken by corporations, except in the case of China where the state still exercises great control on corporations. This is the conventional wisdom.

... contd.