The Hindu : National : Nation-specific bar in new FDI policy opposed

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Friday, Nov 03, 2006
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Nation-specific bar in new FDI policy opposed

Special Correspondent

NEW DELHI: The Communist Party of India (Marxist) on Thursday suggested that the Manmohan Singh Government while drawing up a new Foreign Direct Investment (FDI) policy should impose sector-specific and not country-specific bar.

Commenting on the decision of the Union Government to scrap the joint venture bid floated by the Bharat Sanchar Nigam Limited that was won by Chinese telecom company ZTE after intelligence agencies raised concerns regarding security threat perceptions, the party said this came close on the heels of the refusal to give the deal to construct a deep sea port off the Kerala coast to a consortium of Chinese companies.

It said media reports suggest that the Government is currently finalising a new FDI policy that will, for the first time, include China on a list of countries that are considered sensitive for India's national security.

"Until now, India was selective about imposing restrictions. For instance, only investments in sectors such as ports, aviation and telecom and Internet services were selectively screened.

But the new framework has reportedly increased the security filter to cover a cross-section of important sectors, such as drugs and pharmaceuticals, metallurgy, IT hardware, data processing, hydrocarbon exploration, pipelines and refineries and consumer goods.

"Needless to add, on concerns of security, there can be no compromises. However, such concerns must be expressed sector-wise and not country-specific.

Naturally, in sectors such as telecommunications, for instance, which has serious security implications, we have to be very circumspect. In fact, one of the factors for CPI (M)'s opposition of increasing the FDI cap in this sector was based on this consideration. The Government of India, however, thought otherwise then," the CPI (M) commented editorially in the latest issue of party organ, People's Democracy.

The party said it was, indeed, ironic that such a decision came in the declared year of friendship between India and China. Further, it came barely a month before the official State visit of the Chinese President, Hu Jintao, it said.

`Credibility at stake'

The party argued that the Government's declared policy of attracting FDI in today's globalised world would lose credibility, if it was perceived as a country that did not provide a level playing field.

The CPI (M), it said, had always held that FDI which satisfied the three conditions — augmenting India's existing productive capacities; upgrading India technologically; and enlarging employment opportunities — was welcome. While at the same time, security-sensitive areas and sectors must be carefully scrutinised for the entry of FDI. "However, omnibus banning of countries smacks more of a paranoia than concern for security interests," it said.

India must emerge as an economic powerhouse on the basis of offering and accepting a level playing field in the world today.

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