Chinese FDI: FinMin, NSC on warpath

The finance ministry is likely to come into a conflict with the country's security apparatus, whose concerns are voiced by the National Security Council and senior ministers like Pranab Mukherjee on whether FDI from China can be allowed in security sensitive sectors.

According to top sources in the government, some senior ministers like Mukherjee have supported a recent NSC note raising these concerns.

These sources insist that despite a finance ministry letter to the Prime Minister's Office (PMO) suggesting that FDI from security sensitive countries be considered on a case-to-case basis rather than on basis of the country of origin, it will be a tough going for finance and telecom ministries.

"There is a strong block within the Union Cabinet which is opposing Chinese FDI in sensitive areas like ports and telecom," said a senior minister in the government.

"Let the finance and telecom ministries send their letters and recommendations but the government's stance isn't likely to change anytime soon. The NSC note gave some strong reasons for rejecting Chinese investment in certain sectors," said a senior minister.

With only two weeks to go before Chinese President Hu Jintao visits India, the hawkish position is unlikely to give change. The Chinese were hoping for some relaxation on this matter before the visit.

Finance Minister P Chidambaram may also not have enough time to fight this out with the winter session of Parliament approaching and the task of containing inflation taking up most of his time.