PMO proposes law to regulate foreign investments

Mumbai: The prime minister''s office (PMO) has proposed umbrella legislation that would give the government powers to suspend foreign investments in sensitive sectors and locations on national security considerations. The PMO has sought the opinion of various ministries for such legislation.

This follows a proposal by the National Security Council to formulate a ''National Security Exemption Act'' to give powers to the "government to suspend or prohibit any foreign acquisition, merger or takeovers of an Indian company that is considered prejudicial to national interests."

The NSC has suggested security screening of foreign participation in sensitive sectors like seaports, airports, telecom, Internet service providers, international long distance telecom services, oil refining, gas pipelines, oil and gas exploration, shipping, metallurgy, defence, data processing and pharmaceuticals.

It has also suggested security screening for investments in sensitive locations like Jammu and Kashmir, Chhattisgarh and North Eastern states and areas near vital nuclear, space and defence installations as also border areas.

The NSC has suggested curbs on investments from veritable tax havens like Mauritius, Cyprus and Cayman Islands as criminal groups operating from other countries could pose a security threat. Also, as the source of money could be illegal, it could be used to create economic crisis through sudden withdrawal or pumping in, it pointed out.

The list of countries of concern from where free flow of investment cannot be freely allowed also include China, Hong Kong, Macau, Taiwan, Pakistan, Bangladesh, Afghanistan and North Korea that could threaten security interets as the entities from these countries could be manipulated.