The proposed move to formulate a holistic legislation to allow official agencies to block foreign direct investment in sensitive sectors on security grounds has found support from the three apex industry chambers.
The Confederation of Indian Industry believes the government has every right to decide which sectors of the economy should be open to foreign investment.
"India's security is an extremely sensitive issue, and the government has the right to block FDI in a sector if it feels that a particular investment will compromise the country's security," a CII source said.
Assocham said it had been pitching for a legislation to restrict FDI in sensitive sectors.
"We raised this issue with the government six months back. It must take the security issue into account before allowing FDI in sensitive sectors like telecom," Assocham president Anil K Agarwal said.
According to a Federation of Indian Chambers of Commerce and Industry source, the chamber's support to the government would depend on certain factors.
"We do not yet know the details of the proposed legislation. But if the restriction on FDI is absolutely necessary on security grounds and if it does not affect normal business flow, we will support the government," the source said.
Assocham feels the list of sectors to be put under the security scanner should be prepared after consultation with the industry chambers.
"It is the prerogative of the government to come out with security guidelines. However, they should consult the industry bodies before preparing the list of sensitive sectors," Agarwal said.
Clarity in the proposed framework for the legislation is another issue. "We do not know the method the government is using to classify sectors as sensitive. There should be more clarity on this," Agarwal said.
The industry chambers also believe that FDI inflow into the country will not be affected by the proposed legislation.
