FDI or foreign participation in Indian projects under the present system could be a process for laundering money and Hawala transaction, which were a serious threat to the country's economic security, the NSC said.
"The existing system is flawed in the sense that it does not have a mechanism for examining comprehensively funds coming to sensitive locations, sensitive sectors and from countries of concern, neither at the time of approval nor during the period of operations of foreign entities," the NSC note said.
It suggested foreign participation in sensitive sectors and locations and from countries of concern should be subjected to special security screening both at the time of approval as well as during the entire period of their operation.
Besides, sectoral regulators should seek opinion of intelligence and security agencies and the ministry of finance be made the nodal point for implementation and monitoring of security guidelines.
For all contracts, tenders and agreements entered by state governments, central government departments, PSUs of state and central governments and local bodies, the NSC suggested introduction of a 'National Security Exception Clause,' sources said.
