Country-specific FDI restrictions to go

While doing away with country-specific restrictions on foreign investment, in line with the overall FDI policy and `Make in India' thrust, the government wants a specific clause built into contracts with investors from countries such as China, restraining them from taking up any activity that is not in India's interests. “In case any activity prejudicial to public/national interest comes to the notice of the sectoral regulator or agencies, the contract clause can be invoked to rein in the foreign investor. The clause is meant to legally empower the government to take action, including cancellation of the contract, in extreme cases involving spying or sabotage,“ an MHA official said.
Among the other checks and balances likely to be put in place are post-investment monitoring, development of adequate testing facilities to screen the products in sensitive sectors for spyware/malware, and ensuring that the majority of staff employed are Indians. The proposed FDI norms are part of the home ministry's efforts to replace blanket, pre-investment restrictions with post-investment checks and scrutiny .
Though pre-investment scrutiny will insist on full disclosure of ownership pattern of the foreign investor coming in through the FIPB route, post-investment monitoring is proposed for both automatic and FIPB route. “The idea is to test products not only in a routine manner but also to subject them to random checks so that we can rule out any embedded software,“ a home ministry officer said.