Policy on security concerns in foreign investment soon

Monday, 20 November 2006, 06:00 Hrs
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New Delhi: India will soon unveil a comprehensive policy that will set the guidelines to address security concerns for allowing foreign investment and will not be country-specific, Commerce Minister Kamal Nath said Monday.

The move comes in the wake of concerns raised by security establishments in allowing foreign direct investment in certain key industries like telecom and ports without due diligence.

"There are some reports doing rounds that this policy will put certain countries under the scanner. That is not true," Kamal Nath told a press conference here, responding to questions related to foreign investment norms.

"The policy, under preparation, will not be country-specific but it will address security concerns on case to case basis," added Kamal Nath who also overseas the industry portfolio.

"The project locations, the nature of investment, credentials of investors will form the basis of scanning foreign direct investment."

The National Security Council (NSC) - under the Prime Minister's Office (PMO) - had suggested careful screening of foreign participation in some key sectors and said some investments could be detrimental to India's security interests.

Some Chinese companies as also firms that had a Pakistani interest had not been given clearance to invest or expand in India on grounds that they could pose a threat to national security.

According to the minister, all developed nations had such a regulatory framework to address their security concerns in foreign investment. "So far we do not have such framework but now we are proposing to do the same," he added.

He said his ministry was also considering a proposal for a separate legislation on this issue along with other options. "In the next two months or so, we should be able to decided the exact nature of the policy framework," he said.

The minister also made it clear that such a policy would not affect inflows of foreign investment into India. "There is nothing extraordinary in it and this will not affect foreign direct investment," he added.

Source: IANS
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