'Implement security law judiciously'

Industry chambers have called on the government to be judicious and transparent in implementing the proposed National Security Exception Bill, currently being hammered out by the Centre that could give it sweeping powers to restrict FDI in sensitive sectors where the origin or destination of the investment could harm national security interests.

Agreeing that national security was of prime importance and could not be compromised, industry chambers said while legislation itself was not an issue, the manner in which it would be implemented could hit FDI.

'Legislation per se is a non-issue. National security obviously takes priority and if the government decides to take steps including banning FDI in sectors it considers sensitive to national interests then that is understandable and justifiable,' Confederation of Indian Industry (CII) president R. Seshsayee said.

"However, the legislation might give the government a lot of discretionary powers and the tendency of the government in such issues is not to be transparent and accountable. If they can ensure that they are accountable to a parliamentary sub-committee or an empowered body for the rationale of their decisions to bar FDI in certain cases, that would remove the chances for arbitrary decisions," he added.

Ficci office bearers said that while the government could not be questioned on issues of national interests especially in today's security scenario, blanket powers could evoke tendencies to overreact.

They said if the government could act judiciously and consider all factors before deciding to step in to stop investment in a particular case, then that would not affect foreign investment.

Seshasayee also said while the law itself would not hurt FDI, if it was enforced in an arbitrary manner, then it might send out wrong signals.